China and Hong Kong’s stock markets witnessed a notable decline on Monday, primarily driven by a significant fall in automobile shares amid escalating price war fears. With major car-maker BYD slashing prices to boost sales, its Hong Kong-listed shares saw a 5.9% dip, while competitor Geely Auto’s stocks plummeted by 9.5%.
The overall market sentiment was further dampened by threats of U.S. tariffs on Apple products, impacting suppliers like Luxshare, causing a 0.2% decline. In response, the Shanghai Composite index weakened slightly, dropping to 3,346.84, while Hong Kong’s Hang Seng Index fell 1.4% to 23,282.33.
Despite the downturn, the strengthening of China’s currency past the 7.17 mark against the dollar offered a silver lining. According to analysts, this trend could bolster Chinese equities, with sectors like consumer discretionary and property poised to benefit. Goldman Sachs noted a potential 3% boost in equities for each 1% RMB increase against the USD.
