The Hong Kong stock market experienced a historic plunge on April 7, 2025, as the Hang Seng Index (HSI) closed down 3,021 points, marking the largest single-day point decline in its history. This dramatic fall was triggered by U.S. President Donald Trump's announcement of tariffs on all trading partners, escalating an ongoing trade war that has rattled global markets.
On April 2, Trump declared the imposition of "equivalent tariffs" on all trading partners, a move that prompted China to retaliate with countermeasures. By April 4, the Chinese government announced a 34% tariff on all goods imported from the United States, further heightening tensions. The repercussions of these developments were felt immediately in the stock markets, leading to a widespread sell-off.
Prior to the Hong Kong market's opening, the Dow Jones Industrial Average had already fallen over 2,000 points, and the Nasdaq dropped nearly 6%, losing 962 points to settle at 15,587. As the Hang Seng Index opened lower by 2,119 points, or 9.28%, at 20,730 points, it quickly became clear that the day would be marked by unprecedented volatility.
Throughout the trading session, the HSI continued to decline sharply, at one point dropping 2,981 points, or 13%, to reach 19,868 points. By the end of the day, it closed at 19,828 points, down 3,021 points or 13.22%. This decline has erased all gains made in the year, with the index now more than 5,000 points below its previous high.
The turnover for the day also reached a record high of HKD 620.9 billion, indicating intense trading activity as investors reacted to the news. All 83 constituent stocks of the Hang Seng Index ended lower, with 52 blue-chip stocks suffering declines of more than 10%. HSBC (0005) fell 14.75%, while Alibaba (9988) saw an 18% drop, and Hong Kong Exchanges and Clearing (0388) fell 14.3%.
Wuxi Biologics (2269) was particularly hard hit, plummeting 26.4% to close at HKD 18.28, making it the largest loser among blue-chip stocks. Lenovo (0992) also faced a significant decline, dropping 22.9%.
The export sector bore the brunt of the sell-off, with stocks like Shenzhou International (2313) and Crystal International (2232) falling 11.2% and 12.9%, respectively. Shipping and logistics firms were not spared either; China Merchants (0144) fell 12%, COSCO Shipping (0316) dropped 14%, and CK Hutchison (0001) fell 8.3% to close at HKD 40.2.
Amidst this turmoil, investors sought refuge in the bond market, leading to a drop in the U.S. 10-year Treasury yield, which fell below 3.9%. However, commodities such as gold and oil were also affected, with gold prices dropping below USD 3,000 and crude oil prices falling below USD 60.
In a surprising twist, despite the overall market decline, northbound capital recorded a net purchase of nearly HKD 15.4 billion, suggesting that some investors are still optimistic about the long-term prospects of the Chinese market.
This plunge in the Hong Kong market is not an isolated incident. The global stock markets have been on a downward trajectory since Thursday, April 3, with the Japanese stock market experiencing a significant drop of around 3,000 points, losing its hold on the 31,000-point mark. The ripple effects of the trade war are being felt worldwide, as investors react to the uncertainty surrounding international trade relations.
Historically, the HSI has faced numerous challenges, but this latest decline surpasses previous downturns. The largest point drop prior to this was recorded on October 18, 2024, when the index fell 2,172 points. The 2008 financial crisis also saw a significant decline, with a drop of 2,061 points on January 22 of that year. However, the largest percentage drop in history occurred on October 26, 1987, when the index fell by 33.33% in a single day, a stark reminder of the volatility that can grip financial markets.
As analysts assess the impact of these developments, many are left wondering how long the effects of the trade war will linger. The uncertainty surrounding trade relations between the U.S. and China continues to loom large, and investors are bracing for further volatility in the coming weeks. With the global economy already showing signs of strain, the potential for further market disruptions remains a pressing concern.
As the dust settles on this historic trading day, the focus will undoubtedly shift to the broader implications of the trade war and its impact on the global economy. Investors and analysts alike will be closely monitoring developments in the coming days, as the landscape of international trade continues to evolve.
In conclusion, the events of April 7, 2025, serve as a stark reminder of the interconnectedness of global markets and the significant impact that political decisions can have on economic stability. As the world watches and waits, the future of international trade hangs in the balance.
