Hang Seng Index: Volatility Returns as Tariff Rulings and Chip Bans Bite – Weekly Recap

Trade Developments Sink Hang Seng, Bears Eye Sub-23,000

US trade actions fueled market volatility during the week ending May 30. Rulings on Trump’s Liberation Day tariffs initially lifted risk assets but later triggered a flight to safety. Adding to market jitters, President Trump imposed new restrictions on designer chip software exports to China. The Hang Seng Index ended a six-week winning streak as tech and EV stocks dragged the index into the red.

Brian Tycangco, editor at Stansberry Research, commented:

“Chip design related stocks falling in the US and soaring in China/HK tells you all you need to know about the impact of Trump’s recent move to halt sales of chip design software to China.”

With weak Chinese private sector PMI data released on May 31, market focus now turns to Beijing, further trade developments, and upcoming Caixin PMI data.

Hong Kong Stocks Slide as Tariff Risks Resurface

Despite US equities rising— the Nasdaq Composite Index gained 2.01%— trade tensions weighed on sentiment in Hong Kong and Mainland China. The Hang Seng Index closed the week down 1.32% to 23,290. Mainland China’s CSI 300 and Shanghai Composite Index fell 1.08% and 0.03%, respectively.

Tech and EV Stocks Under Pressure

The high-profile Hang Seng Tech Index declined 1.46% in the week on chip-related restrictions and tariff concerns. Tech heavyweights Alibaba (9988) and Baidu (9888) posted weekly losses of 4.12% and 1.74%, respectively. JD.com (9618) lost 2.27% on concerns about competition and profit margins.

EV stocks posted steeper losses. BYD (1211) plunged 15.56% after reports of financial irregularities at a dealership. Geely Automobile Holdings (175) tumbled 13.2%, while Li Auto (2015) fell 1.06% despite upbeat Q1 earnings.

Court Rulings Heighten Market Uncertainty

On May 28, the New York-based Court of International Trade ruled that the US President cannot use the International Emergency Economic Powers Act (IEEPA) to impose tariffs without Congressional approval. However, a day later, the US Court of Appeals reinstated the tariffs, reviving risk aversion.

More Trade Tensions Emerge

New restrictions on designer chip software pressured tech stocks. US Treasury Secretary Scott Bessent also dampened hopes for a swift US-China trade agreement, stating talks had stalled.

On May 30, President Trump accused China of breaching the 90-day trade war truce, saying:

“China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!”

US officials accused China of delaying rare earth exports— critical to manufacturing and tech— even as Washington suspended chip software exports.

China PMI Data Raises Growth Concerns

China’s NBS private sector PMI data suggested the Chinese economy struggled in mid-Q2. The NBS Manufacturing PMI increased from 49 in April to 49.5 in May, remaining below the neutral 50 level. Meanwhile, the NBS Non-Manufacturing PMI dropped from 50.4 to 50.3 in May.

According to CN Wire, new export orders rose from 44.7 to 47.5, with firms citing stronger US-linked demand.

Key Levels to Watch: 23,000 Support or a 24,000 Test

Despite the weekly loss, the Hang Seng Index remains within a three-week trading range. A drop below 23,000 could expose the 50-day Exponential Moving Average (EMA) and potentially signal a retreat toward the key 22,000 psychological level.

Conversely, improved trade sentiment could send the index back toward 24,000. A break above 24,000 would bring the March high of 24,847 into sight. Any fresh stimulus pledges from Beijing could accelerate a return to 24,000.

Hang Seng Technical Outlook

• Resistance: 24,000, then 24,874.
• Support: 23,000, 50-day EMA at 22,744, then 22,000.
• Bias: Neutral-to-Bullish in the short term, contingent on upcoming data, trade headlines, and stimulus policy.

Forecast Summary

The Hang Seng trades within a tight band despite rising volatility. Trade disputes and Beijing’s silence on stimulus are weighing on risk appetite. Upcoming Caixin PMI data (due June 3 and 5), trade news, or fresh policy pledges may offer direction. Until then, markets are likely to stay cautious and headline-driven.

For real-time updates on US-China trade talks, global stimulus efforts, and central bank signals, follow our live coverage and consult our economic calendar.