China’s major stock indexes rose modestly on Tuesday, April 8, 2025, following sharp losses the day before, as Beijing moved swiftly to stabilize financial markets amid rising trade tensions with the United States.
The blue-chip CSI 300 Index increased by 0.2%, while the Shanghai Composite Index was up 0.3% in early morning trading. This followed Monday’s steep drops, when both indexes fell more than 7%, sparking concerns among investors and analysts.
In Hong Kong, the Hang Seng Index recovered 2%, and the Hang Seng Tech Index surged by 4.5%. These gains came after Hong Kong markets experienced their worst single-day decline since the 1997 Asian financial crisis, with tech stocks taking the biggest hit.
Beijing Takes Swift Action to Support Markets
In a rare move, China’s sovereign wealth fund, Central Huijin Investment, announced it had started buying shares through exchange-traded funds (ETFs). The fund said it plans to continue increasing holdings to “safeguard the smooth operation of the capital market.”
Often referred to as part of the “national team”—a group of state-backed funds used during market turbulence—Central Huijin’s intervention is widely seen as a sign that Beijing is serious about calming market volatility.
A number of state-owned enterprises (SOEs) also pledged to increase their share purchases on Tuesday, joining the effort to restore investor confidence. In addition, several listed companies have announced share buyback plans to support stock prices and counter negative sentiment.
Trade Tensions at the Core of the Market Turmoil
The recent market chaos was largely triggered by a renewed trade dispute between the United States and China. Last week, U.S. President Donald Trump imposed a 34% tariff on Chinese imports, calling it a “Liberation Day” move aimed at resetting global trade.
In response, China quickly retaliated by placing an equivalent 34% levy on American goods, escalating fears of a prolonged trade war that could weigh heavily on global economic growth.
Market watchers say the sharp sell-offs in Chinese and Hong Kong stocks reflect deep investor concern over the possible long-term impact of this conflict.
Monday’s Sharp Decline Still Lingers
Despite Tuesday’s rebound, analysts warn that volatility may continue in the coming days.
On Monday, the CSI 300 Index and Shanghai Composite both dropped more than 7%, while the Hang Seng Tech Index saw a dramatic 19% plunge since the announcement of the tariffs. Many investors pulled out of high-risk tech shares amid fears of supply chain disruptions and falling export revenues.
These losses have raised alarm across Asia and beyond, as many countries rely on trade flows between the world’s two largest economies.
Regional Markets Show Signs of Recovery
Across the Asia-Pacific region, markets rebounded slightly on Tuesday. Japan’s Nikkei 225 Index surged by 6%, leading the gains, as investors saw buying opportunities after the previous day’s heavy losses.
The MSCI Asia-Pacific Index, excluding Japan, inched up 0.1%, reflecting a cautious return to risk as fears of a global recession eased slightly.
Experts suggest that while Beijing’s support measures are helping stabilize the market in the short term, lasting calm will depend on how the U.S.–China trade situation unfolds in the coming weeks.
Expert Opinions on Market Outlook
“Beijing’s fast and visible response to Monday’s crash has helped avoid a larger panic,” said Chen Yi, a senior analyst at Huatai Securities. “But the trade war remains a serious concern. Markets will stay sensitive to every new development.”
Meanwhile, Sarah Lin, an economist at Singapore-based Sincere Capital, added, “The rebound is a relief, but let’s not forget that the structural risks have not gone away. Investors are still nervous.”
Investors are now watching for the next moves from both Washington and Beijing, including whether more tariffs will be introduced or if negotiations could resume.
At the same time, analysts expect state intervention in China’s markets to continue in the short term. This may include more share purchases by Central Huijin and further policy announcements from regulators to improve market liquidity and investor sentiment.
