China Developer Stocks Hit as Hang Seng Has Worst Day Since 1997

China doesn’t export condos, warehouses or office buildings to the US, but that did not spare the country’s largest property developers from the impact of a global market rout triggered by US President Donald Trump’s tariff barrage announced last week.

An index of property shares listed on the Hong Kong stock exchange fell 7.88 percent on Monday, led by declines in some of mainland China’s largest developers, after Beijing reacted to Trump’s Wednesday announcement of a 34 percent tariff on Chinese goods entering the US with an identical duty on American products shipped to the Middle Kingdom.

Country Garden Holdings’ Hong Kong-listed shares plunged 14.6 percent while China Vanke’s stock fell 10.8 percent and Longfor Properties saw its share price drop 9.6 percent.

Hong Kong developer New World Development, which generates much of its revenue from mainland China, saw its stock decline 13.6 percent, and Swire Properties, which has made China the focus of a $13 billion investment plan, saw its share price shrink 8.8 percent.

While the Hang Seng property indicator took a great fall, it was outpaced by the broader Hang Seng index, which dropped 13.2 percent in its worst one-day performance since the Asian Financial Crisis of 1997. The mainland A-share market dropped by 7.3 percent.

Stocks were down across Asia Pacific with Tokyo’s Nikkei 225 index losing nearly 7.7 percent, while Singapore’s Straits Times Index dipping 7.5 percent. South Korea’s KOSPI index dropped 5.6 percent and Australia’s S&P/ASX 200 slid more than 4 percent.

More Pain for Property Sector

The market freefall came after the Trump tariffs slapped 10 percent import taxes on goods from every country, with additional duties on shipments from some of the US’ largest trading partners, with traffic from India hit with 26 percent taxes, South Korea with 25 percent and Japan with 24 percent, in addition to the China levies.

Jeff Zhang, an equity analyst at Morningstar, indicated that he saw no direct impact from the new taxes on Chinese home sales, but added, “That said, the recent selloff indicates fast-changing investor sentiment on China property names.”

In the face of dimming consumer demand and lower market confidence, the performance of China’s largest private sector developers has continued to slide, with Country Garden’s March sales plunging 29.8 percent from a year earlier and Longfor suffering a 36.7 percent drop year-on-year.

“With March’s contracted sales of top 100 developers down by 11 percent year on year, we think the market may want to see more concrete rebound in home transactions before turning positive on the sector,” Zhang added.

Yang Guanghua, an independent real estate analyst writing in a column published in Chinese real estate news portal Guandian predicted that the Chinese government could roll out additional support for the economy which could bolster the property sector.

Yang predicted that the government may accelerate stimulus measures to stabilize the economy, including lowering the benchmark loan prime rate, but said that there is also the potential for the People’s Bank of China to raise interest rates to curb inflation arising from higher tariffs on imported goods.

Less Dependence on US

A commentary published Sunday by the People’s Daily declared that China has a “strong capacity to withstand the pressure” and has “plenty of countermeasures at hand” in the face of US tariffs. “After eight years of trade war with the US, we’ve built up a wealth of experience in this struggle.”

Lynn Song, chief economist of Greater China at Dutch bank ING, said China has “de-risked” its commercial relationship with the US since the trade war that Trump launched during his first term in office.

“The proportion of China’s total exports to the US has fallen from around 19 percent in 2017 to 14.6 percent in 2024. While the US is still obviously a very important market, fewer firms are now existentially dependent on US suppliers or consumers compared to before the first trade war,” Song said.

S&P Global Rating credit analyst Eunice Tan says that Asia-Pacific economies face a huge but uneven hit from Trump’s tariff offensive. Smaller countries or regions that are dependent on export trade to the US, such as Vietnam, Taiwan, and Thailand, will face greater impact, Tan said.

“These US tariffs, and possible responses by other economies, will likely lead to slower GDP growth globally – hitting trade-centric Asia-Pacific,” said Tan. “The impact spans economies, financial markets, supply chains, and geopolitics and will force governments, businesses, and households to retune their approach to trade relations, capital expenditure, and consumption.”