Chinese stocks drop following new Trump probe storm

By Wang Bozun Source:Global Times Published: 2017/5/18 23:38:39

Naming of special counsel ‘adds to uncertainties’

Chinese stocks closed lower on Thursday following the trend of other major stock markets on the news of the appointment of a special counsel by the US Justice Department to probe any potential collusion between President Donald Trump's election campaign and Russia.

The benchmark Shanghai Composite Index fell 0.46 percent, or 14.30 points, to 3,090.14 while the Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 0.63 percent, or 11.69 points, to 1,855.99, on Thursday, according to reports.

The drop in the Chinese stock prices came after the US Justice Department appointed a former FBI director as special counsel to investigate possible collusion between President Donald Trump's 2016 campaign team and Russia, which experts say would complicate policies of Trump, including tax reforms, that have boosted stocks in the US.

The new developments in the Russia investigation add to an already-uncertain Trump presidency, which had an impact on the markets not just in the US but across the world, including China, according to Jiang Yong, a research fellow at the China Institutes of Contemporary International Relations.

"Uncertainty is part of Trump's nature, and that will continue to affect financial markets," Jiang told the Global Times on Thursday.

Since Trump took office, US stocks have rallied on the prospect that the new administration would carry out tax reforms that would likely give huge cuts to the corporations and wealthy investors. Trump also promised to boost infrastructure investment, which many in Wall Street believe would boost the economy.

But with all the political scandals surrounding the Trump administration, the outlook of such policies welcomed by the financial markets has dimmed, experts noted.

On Wednesday, leading US indices suffered their deepest declines since before the November 2016 election on worries that Trump's growth agenda will languish in the wake of numerous stumbles.

The current situation in Washington could also impact the China-US relationship, which has been improving in recent weeks following a meeting between Chinese President Xi Jinping and Trump in Mar-a-Lago, according to Han Bing, an expert at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.


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