Market Jitters: China and Hong Kong Stocks Face Setbacks Amid Trade Tensions

On Monday, China and Hong Kong stock markets experienced significant declines as concerns over U.S. tariffs on imported iPhones impacted automobile and Apple supplier stocks. The Shanghai Composite index fell by 0.3%, settling at 3,338.42 points, while China's blue-chip CSI300 index dropped 0.7%.

In Hong Kong, the Hang Seng Index decreased by 1% to 23,366.06 points, and the Hang Seng China Enterprises Index saw a 1.3% drop to 8,474.69. Stocks of Apple suppliers, including Luxshare and Lens Tech, lost 1.3%, while Goertek, an Airpod maker, declined by 0.7%. The automobile industry also struggled, with the CSI All Share Automobiles Index falling 2.8% and the Hang Seng Automobile Index in Hong Kong plummeting by 4.6%.

Despite the downturn, analysts are hopeful as the yuan strengthens past the 7.17 level. China's central bank's actions to tighten the midpoint fixing have contributed to the currency's appreciation. Analysts suggest that the stronger yuan could provide support to Chinese stocks, with sectors like consumer discretionary and property expected to benefit.

(With inputs from agencies.)