Panic selling grips Asia as Hang Seng suffers worst single-day drop since 1997 crisis.
Hong Kong’s financial markets were rocked on Monday as the Hang Seng Index experienced a staggering freefall of 13.22%, marking its most severe single-day collapse since the 1997 Asian financial crisis. At its lowest point, the index had dropped by as much as 13.74%, triggering alarm bells across the region and beyond.
The meltdown was fueled by escalating trade tensions after U.S. President Donald Trump imposed sweeping tariffs on key global economies, followed by China’s aggressive countermeasure—introducing a 34% tariff on U.S. imports.
“It’s a double shock,” said Carlos Casanova, senior economist at Union Bancaire Privée (UBP) in Hong Kong. “Markets are reacting not only to Trump’s surprise announcement but also to Beijing’s immediate retaliation. The scale of these moves is unprecedented.”
Hong Kong’s markets had been closed for a public holiday on Friday, delaying their reaction to the unfolding events. The sudden release of pent-up market anxiety led to what analysts described as a historic wave of panic selling.
Trump defended the tariffs, comparing them to “bitter medicine” necessary to correct long-standing imbalances. However, the financial world is not convinced. Global investors are spooked by the scale and speed of the policy changes, and fears of a full-scale trade war are mounting.
According to Alicia Garcia-Herrero, chief Asia Pacific economist at Natixis, the collapse in Hong Kong is a more realistic reflection of investor sentiment than the mainland Chinese markets, which are more restricted. “You can’t short stocks in China or trade freely like you can in Hong Kong. That’s why the Hang Seng’s plunge is such a strong indicator of true market fears.”
Markets across Asia followed suit, with steep losses reported in mainland China, Japan, South Korea, Taiwan, Australia, and Singapore. Collectively, stock markets have shed trillions of dollars in value since Trump’s announcement last week.
In the U.S., the impact has already been brutal. More than $6 trillion in market value has evaporated since the president’s “Liberation Day” declaration. The pain is expected to deepen when American markets reopen, as S&P500 and Nasdaq-100 futures plunged 2.7% and 3.55%, respectively, during after-hours trading.
With sharper U.S. tariffs set to escalate further—ranging up to 50% on some imports—the global financial landscape is bracing for more turbulence.
As the world watches anxiously, one thing is clear: the economic chess match between the United States and China has entered a volatile new phase—and the markets are feeling every move.
