Chinese stocks trading in the U.S. tumbled Friday after former President Donald Trump threatened to sharply raise tariffs on Chinese imports if he returns to office, warning that China has become “very hostile.”
Alibaba and Baidu each slid about 8%, while JD.com and PDD Holdings fell 6.6% and 5.2%, respectively. The iShares MSCI China ETF (MCHI), which tracks major Chinese companies listed in the U.S., dropped 5.2%.
The selloff underscored renewed investor anxiety over escalating U.S.-China tensions, which have flared periodically amid disputes over trade, technmology and national security.
Trump accused China of holding the world “captive” through its dominance in rare earth metals. Earlier this week, Beijing tightened its grip on the sector, requiring foreign companies to obtain government licenses to export any products containing rare earth elements that make up 0.1% or more of their total value.
“Friday served as a reminder of how emotion and uncertainty can drive markets,” said Mark Hackett, chief market strategist at Nationwide.” “It is too early to say with confidence if the comments will trigger the next phase of the trade conflict between the US and China or more negotiating in public, but investors have chosen a wait-and-see tactic.”
Chinese stocks have staged a strong rebound this year, buoyed by signs of economic stabilization and renewed investor optimism after years of underperformance. The iShares MSCI China ETF is still up 32% even after Friday’s pullback.
— CNBC’s Sarah Min contributed reporting.
