Key Takeaways:

• The Hang Seng Index fell by 13.22%, its largest single-day drop since the 1997 Asian financial crisis.
• This decline reflects rising global concerns over the escalating trade tensions between the US and China.
• Financial Secretary Paul Chan has warned of increased market volatility but refrained from immediate intervention.

Hong Kong’s financial markets have been shaken to the core as the Hang Seng Index registered a stark decrease of 13.22%, marking the largest single-day decline since the tumultuous 1997 Asian financial crisis. The plunge to 19,828.30 signified drastic investor reactions due to fears surrounding the intensifying trade war between the US and China, which has now engulfed global markets. The situation worsened when Beijing announced retaliatory tariffs on US imports, with increases reaching up to 34%, prompting widespread selling on both the Hong Kong and mainland exchanges, with the CSI300 index falling 7.34% as well.

Investors anticipated the ramifications of President Trump’s sweeping tariff strategy, which aims to impose hefty duties on various Chinese goods, and fears followed of a potential contraction in global trade. Stocks from technology giants like Alibaba and Tencent suffered significant losses, underscoring the vulnerability of companies engaged in international trade.

Financial Secretary Paul Chan has acknowledged the market's instability, advising investors to exercise caution and manage risks amid “pessimism.” Despite the turmoil, he has stated that the market operates smoothly without irregularities in trading. The Hong Kong government has reiterated its commitment to upholding its free-port status, providing a buffer against external trade tensions. Although rising tariffs are predicted to affect local economic conditions, Chan remains optimistic that Hong Kong can attract capital inflows, maintaining its status as a leading international financial center based on its solid infrastructure and resilience.

The broader Asia-Pacific region witnessed a slump in other major indices as well, with Japan’s Nikkei 225 and Australia’s S&P/ASX 200 facing significant declines. As sentiment continues to waver under the weight of tariff threats and trade reprisals, analysts forecast further volatility in the coming days. Chan urged market participants to remain mindful of global economic forecasts, especially as forecasts from analysts suggest a 45% chance of a US recession resulting from the ongoing trade tensions.

As Al Jazeera suggested, without intervention measures from central authorities, the markets may continue to experience turbulence, making it essential for investors to prepare for continued fluctuations.

For more detailed information, visit the full articles through Bangkok Post and The Jakarta Post.