Credit：Xinhua News Agency
The mainland China's SSE Composite Index closed 1.4% lower and the ChiNext index, which tracks stocks traded on the Nasdaq-style subsidiary of the Shenzhen Stock Exchange, edged down less than 0.1% on Friday. The blue chip CSI 300 index of onshore stocks finished 1.1% lower and Hong Kong’s benchmark Hang Seng Index down around 2.84%.
The Nasdaq Golden Dragon China Index, which tracks 65 China-exposed U.S.-listed companies, settled nearly 4.5% lower to its lowest since September 25, wiping out its 0.6% rally Monday. The index underperformed the U.S. stock market as the benchmark S&P 500 dropped almost 0.3%, snapping its fourth consecutive record close. The American depositary receipts (ADRs) of Chinese electric vehicle (EV) makers Xpeng, Nio, Zeekr, Li Auto slumped from 7.1% to 10.7%. ADRs of Alibaba declined 3.8%, and its e-commerce rivals JD.com and Temu parent PDD lost 7.5% and 2.9%, respectively.
Exchange-trade funds (ETFs) tracking the investment in Chinese equities accordingly logged losses. The KraneShares CSI China Internet ETF and the Invesco China Technology ETF closed 4.6% and 3.7% lower, respectively. China exposed stocks traded in Europe, particularly luxury firms, were also hit by the fear of the intensifying tension between China and U.S. The broader luxury index plunged nearly 4%, and Kering, LVMH and Hermes down 3.4% to 5.8%.
The onshore Chinese yuan settled at $7.2378 per dollar on Tuesday, its lowest since August 1. The offshore yuan fell to as low as 7.2555, also hitting the lowest since the start of August.
China-related assets fell as recent reports said two Florida lawmakers have been selected by Trump for key positions in his administration. Trump has threatened to slap up a tariff of up to 60% on all goods imported to the U.S. from China, doubling down the protectionist move in his first term. And now his new cabinet seems lining up China hawks.
Trump is expected to tap Senator Marco Rubio as Secretary of State, Fox News cited a source familiar. House Representative Michael Waltz will be appointed as national security adviser - a key role that advises the president on the US response to foreign threats, according to CBS News.
Rubio has taken a particularly aggressive approach to China’s economic rise, and is one of several U.S. officials barred from entering China, starting from Trump’s first term in 2020. Rubio is hawkish against all the usual suspects, a report from the Foreign Policy commented. “He is suspicious of, if not belligerent, toward China, hostile to Iran, not keen on Venezuela, rueful of the Cuba his parents left, and indifferent toward Gaza and Ukraine,” the report said. ”The only problem with Rubio, from Trump’s point of view, is that he might be too hawkish.”
Waltz is regarded as one of Congress's most hawkish members concerning China. The Florida congressman has introduced legislation to decrease American dependency on Chinese minerals. He asserted in 2021, "We are in a Cold War with the Chinese Communist Party." He the same year became the first member of Congress to advocate for a complete U.S. boycott of the 2022 Winter Olympics in Beijing.
