US-China Stocks Hope Trump Won't Return

Fears of a trade war between Washington and Beijing were revived along with Trump's pledges to cut dependence on China.
Nov. 16, 2022 21:54
US-China Stocks Hope Trump Won't Return

(CapitalWatch, Nov. 16, New York) At last, U.S.-China investors got a positive sign on the longstanding auditing issue, but the possibility of Donald Trump's return to office soured the sentiment. U.S.-China stocks rolled back across the board as of midday Wednesday after Tuesday gains.

The outlook has been grim with uncertainty for U.S.-listed Chinese stocks lately as China's economy continues to show signs of slowing, Covid restrictions weigh on industrial output, and consumption has weakened. On top of the macro challenges, Chinese President Xi Jinping's antitrust and collectivization laws will force industry leaders to keep their heads down. But the future of U.S.-China stocks may get much grimier yet if the former U.S. president gets his way again.  

Trade War Fears Revived

Donald Trump announced his presidential re-run in a Tuesday night speech, confirming the intent he expressed last week. President Joe Biden will likely counter him again – and, as The New York Times reported, the Democrats have been working hard on the anti-Trump campaign, so it's bound to be a massive standoff.

The relations with China became a major battlefront for Donald Trump during his presidency. It was he who launched the so-called trade war with the world's second-largest economy, hiking up tariffs on imports and closing off the U.S. market from several Chinese tech companies. He also attempted to ban widely popular Chinese apps TikTok and WeChat – thankfully, to no avail, as the courts sided with the latter.

Now, seeing that Beijing hasn't kept up with the Phase 1 trade deal, Trump is moving ahead with his prior rhetoric on China.

"No president had ever sought or received 1$ for our country from China until I came along," Trump said in his speech on Tuesday. As multiple media remarked, the statement is false, considering the U.S. tariffs on Chinese goods date back to the 19th Century. But going forward, the issue remains a heated one for Trump: he said he prepares to "launch an all-out campaign to eliminate America's dependence on China."

US-China Stocks Tumble

Meanwhile, the stock market was quick to respond to such a shake-up, and the Chinese stocks took a hit.

This time, e-commerce stocks Alibaba Group (NYSE: BABA; HKEX: 9988) and JD.com Inc. (Nasdaq: JD; HKEX: 9618) were relatively unscathed, down about 1% each as of midday Wednesday. Some of the biggest losers were IT stocks Agora Inc. (Nasdaq: API) and GDS Holdings (Nasdaq: GDS) – both down 12%, gaming tech companies Huya (NYSE: HUYA) and Douyu (Nasdaq: DOYU) were down 13% and 11%, respectively. China's Netflix, iQiyi Inc. (NYSE: IQ) declined 8% while its parent giant Baidu Inc. (Nasdaq: BIDU; HKEX: 9888) was down 5%.

The newly-listed Chinese hotel chain Atour Lifestyle Holdings Ltd. (Nasdaq: ATAT) tanked 17%, seeing some volatility in post-IPO days. Other segments like education, solar energy, fintech, and biotech also traded significantly lower across the board.

Separately, EV stocks tumbled significantly Wednesday on reports of weakened demand in the automotive sector. Nio (NYSE: NIO; HKEX: 9866) dropped 8% by midday to a near single-digit stock value. That placed it 68% down year-to-date. Its smaller rival XPeng (NYSE: XPEV; HKEX: 9868) slid 11% to $8.03 per share, while Li Auto (Nasdaq: LI; HKEX: 2015) was down 6% to $17.77. Auto marketplace Uxin (Nasdaq: UXIN) also took a hit, losing 11% in market value.