Catenaa, Monday, April 07, 2025- China investors saw an Ugly Monday as the markets fell by nearly 7% as the nation retaliates to US tariffs after an extended weekend.
The Shanghai Composite index fell by 6.34% on Monday morning, CSI 300 fell by 6.47%, and the Hang Seng Index fell by 10.4%. A gauge of Chinese stocks listed in the US plunged 8.9% on Friday, the most since October 2022.
Beijing announced 34% tariffs on all imports from the US, during a holiday for Chinese and Hong Kong equities.
The quick retaliation by China, following US President Donald Trump unleashing the steepest increase in tariffs in a century last week, has raised the odds of a global recession. The heavy selloff in US-listed Chinese stocks also reflected fears of further tit-for-tat responses between the world’s top two economies.
Goldman Sachs Group Inc. trimmed its 12-month targets for Chinese equity indexes in a report on Sunday. The MSCI China Index target was cut to 81 from 85, while the CSI 300 Index outlook was lowered to 4,500 from 4,700 over the same time frame.
“The bull run will slow on event risks and profit-taking pressures,” Goldman Sachs said. “The market may test our risk-case valuations in the short term until trade and policy clarity emerges, and/or a new tariff equilibrium is reached.”
The MSCI China Index has risen 13% year-to-date, compared with an almost 14% drop in the S&P 500 Index.
Meanwhile, traders have begun pricing in what increasingly looks like a negative-feedback loop. Trump showed little sign of backing down even as $5.4 trillion was wiped off the market value of the S&P 500 Index in two sessions — the worst meltdown since the pandemic hit the US in 2020.
The yuan will also be in focus as analysts have long been saying Beijing may weaken the currency to boost exports and blunt the impact of higher US tariffs. The yuan slid to the weakest level since February in onshore trading following Trump’s tariff announcement.
