Donald Trump is the E.F. Hutton of the Chinese stock market these days. When Trump talks, China’s investors listen.
For the second time in recent weeks, China’s stock market went into a nosedive after something the former U.S. president did or said.
Previously, it was after Trump's 30-point trouncing of his GOP primary opponents in Iowa that was the catalyst in a China stock slump.
As Trump’s convincing victory in Iowa became apparent, Chinese equities dropped after the country’s central bank decided to keep its medium-term policy rate unchanged at 2.5 percent, failing to cut interest as was widely expected by investors. The country’s CSI 300 was at its lowest level since 2019, a record only previously beaten in October 2023.
On Monday, the CSI 1000 index, a gauge of small-cap stocks, closed 6.2 percent down after Trump had warned on Sunday that if he is returned to the White House he will impose a more than 60 percent tariff on all imports from China.
“Putting the latest collapse in context, China's market capitalization has sunk by just over $1 trillion in the space of 13 trading days, dragging the total value of the nation’s equities under $8 trillion on Friday, from just above $9 trillion on Jan. 16, as the authorities’ hand-wringing about equity declines simply concentrated investors’ minds on the apparent lack of any solutions for the downturn,” Zero Hedge noted.
“While Trump was likely in his conventional hyperbolic mode, Chinese investors did not see it that way, and Chinese stocks plunged to fresh multi year lows, after the latest disappointment from Beijing which again pledged to stabilize markets after shares sank to a five-year low in chaotic trading on Friday, without offering any specifics on just how it plans to end the relentless selloff that’s erased more than $6 trillion of value and dented confidence in the world’s second-largest economy.”
The Wall Street Journal reported that Chinese investors flooded a U.S. embassy social media post about giraffes with complaints about the stock market.
Zero Hedge added that Trump’s comments on imposing tariffs on China were “first and foremost” the catalyst for Monday’s plunge.
Trump discusses his plan to protect American business with @MariaBartiromo
cc: @SundayFutures @FoxNews pic.twitter.com/NpWXgWnxWc — SundayMorningFutures (@SundayFutures) February 4, 2024
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