China stocks plunged on Monday as renewed US-China trade tensions rattled investors, prompting profit-taking after recent rallies. The blue-chip CSI300 Index fell 1.8 per cent, the Shanghai Composite dropped 1.3 per cent, while Hong Kong's Hang Seng and Hang Seng Tech indexes slumped 3.5 per cent and 4.5 per cent respectively. Amid the broader sell-off, China's rare earth sector jumped over 4 per cent to a record high, and semiconductor stocks also gained, reflecting their central role in trade disputes. The turbulence followed US President Donald Trump's announcement of 100 per cent tariffs on Chinese exports and new export controls on critical software, escalating tensions over rare earth supplies. Market volatility spiked, with Hang Seng's 30-day volatility index surging 30 per cent, while China's 10-year bond futures rose as investors sought safe havens. Stronger yuan guidance and upbeat trade data failed to calm broader concerns. Analysts expect the sell-off to be shorter than the panic seen in April, with many predicting a rotation from growth to value stocks. Experts also noted that China and the US are likely to continue negotiations, with Beijing easing fears by clarifying that its export control is not a full ban. Some sectors, including AI, robotics, defence, innovative drugs, and chipmaking, may benefit, while export-oriented industries could face headwinds. Analysts suggest Trump's 100 per cent tariff threat is largely a negotiating tactic, and near-term escalation may be limited as both powers remain economically interdependent. Attribution: Reuters Subediting: Y.Yasser
