China, Hong Kong stocks slump as Trump threatens higher tariffs on US$200 billion worth of Chinese goods   

The Hong Kong benchmark falls to a 10-month low, weighed down by Tencent Holdings

Hong Kong stocks slumped to a 10-month low on Thursday along with tumbling Chinese stocks,after President Donald Trump said the US was considering more than doubling the tariff rates on the proposed US$200 billion worth of Chinese goods, escalating a trade dispute between the world¡¯s two largest economies.

The Hang Seng Index declined 2.2 per cent, or 626.18 points, to 27,714.56, falling for a fourth straight day to the lowest level since September 28. The losses came after the White House said it was assessing a plan to increase the duties to 25 per cent from 10 per cent, which can come into effect as early as next month.

In the mainland, the Shanghai Composite Index slid 2 per cent, or 56.51 points, to 2,768.02, extending a 1.8 per cent drop a day earlier. The sell-off put the benchmark of the mainland¡¯s equities just 2 per cent shy of a 28-month low set on July 5.

¡°New threats from the US to increase tariffs indicate the trade dispute is worsening and broadening. This has led to more pessimistic sentiment in the financial market,¡± said Gordon Tsui, managing director at Hantec Pacific. ¡°The cautious trading will last at least several months towards the end of this year.¡±

Traders are offloading their holdings of Chinese stocks even after Beijing has implemented counter measures to cushion a possible slowdown from its trade friction with the US. At a top leadership meeting on Tuesday, policymakers pledged to spend more on infrastructure projects, fine-tune monetary policies and ease off on financial deleveraging.