The Hang Seng Index dropped 1.7 per cent to 23,156.89 at the noon break, giving up some of Monday’s 3 per cent gain. The Hang Seng Tech Index dropped 3 per cent.
On the mainland, the CSI 300 Index the Shanghai Composite Index were both little changed.
Export-heavy companies led the pack of decliners after the hefty gains. Camera module maker Sunny Optical Technology Group slumped 6.8 per cent to HK$68.95, and BYD Electronic International slid 5.7 per cent to HK$35.80. E-commerce giant JD.com lost 1.6 per cent to HK$137.60 before its earnings release later on Tuesday. Alibaba Group Holding slid 3.7 per cent to HK$126.40 and Tencent Holdings dropped 2 per cent to HK$507.
Traders took some profit after the upsurge in the Hang Seng Index on Monday, which was spurred by a tentative trade deal between China and US to cut the tariffs on each other’s imported products. While the de-escalation dispelled some gloom for global growth and boosted demand for risk assets, some economists warned of more potential clashes.
“It might be just the beginning of the inevitable collision of the two largest economies,” said Lu Ting, chief China economist at Nomura in Hong Kong. “After enjoying a rebound, markets perhaps need to ponder the medium to long-term risk. The US is still on the offensive, but China might learn much better how to dig itself in for the future attack.”
