published Feb 2nd 2017, 7:41 pm, by Justina Lee

(Bloomberg) —
Chinese stocks opened lower after a week-long break that saw growing international concern over President Donald Trump’s policies.

The Shanghai Composite Index fell 0.3 percent to 3,150.16 at 9:37 a.m. local time. A gauge of Chinese shares traded in Hong Kong slumped 1.6 percent while mainland financial markets were closed for the Lunar New Year holidays. The Hang Seng China Enterprises Index was little changed on Friday.

Trump’s moves in the past week, ranging from a travel ban for some countries to assertions that other nations are manipulating currencies, rattled financial markets and propelled the Bloomberg Dollar Index to an 11-week low. Such weakness in the greenback helped the offshore yuan extend last month’s gain that was the biggest since 2010. The barrage of controversial executive orders also fueled concern he will follow through with a campaign promise to raise tariffs on Chinese imports.

“Trump has implemented some of his campaign promises very quickly, and he’s said he will raise tariffs on Chinese imports to 45 percent,” said Daniel So, a strategist at CMB International Securities Ltd. in Hong Kong. “Now it looks like it might not just be empty talk. But the market may not be scared so soon.”

The People’s Bank of China strengthens its reference rate for the yuan by 0.05 percent to 6.8556 against the dollar. The offshore currency slipped 0.1 percent.

The following are some of the major moves and news that occurred while China’s markets were closed.

Currencies:

The offshore yuan gained 0.6% during the break, widening the gap with the onshore rate to the widest since Jan. 6 on a closing basis. That means the exchange rate in Shanghai will face pressure to strengthen Trump probably hasn’t followed through on campaign pledges to label China a currency manipulator because the yuan has been stronger than he anticipated, Terry Branstad, the U.S. president’s pick as ambassador to China, said Tuesday

Stocks:

Airlines, insurers and rail-related companies were among the biggest losers on the Hang Seng China Enterprises gauge, which fell to the lowest level since Jan. 16. Xiao Jianhua, who runs the Tomorrow Group investment conglomerate, hasn’t been seen in Hong Kong since last week. Local newspapers say he was taken from the city by Chinese police
Bond, Money Markets:

The 10-year U.S. Treasury yield dropped 5 basis points since the start of China’s holiday, giving support to Chinese bonds While cash demand may ease as the holidays end, nearly 2.4 trillion yuan ($351 billion) of liquidity facilities are expected to mature this month, according to Bank of America Merrill Lynch. In a sign of tightening, the People’s Bank of China raised the rate on medium-term loans just before the holidays In Hong Kong, while the overnight yuan interbank rate slid as markets reopened, longer-end rates fell more slowly, indicating expectations funding conditions will remain tight
Economy:

China’s official manufacturing purchasing managers index was 51.3 in January, compared with the median estimate of 51.2 in a Bloomberg survey of economists and a reading of 51.4 in December, data showed on Wednesday. A private measure due to be released by Caixin Media and Markit Economics on Friday is projected to show stabilization as well The flash reading for South Korea’s exports rose 11.2% from a year earlier in January, the most since 2012. This bodes well for Chinese shipments, which tend to move roughly in line with Korea’s, according to Bloomberg Intelligence
To contact the reporter on this story: Justina Lee in Hong Kong at jlee1489@bloomberg.net To contact the editors responsible for this story: Richard Frost at rfrost4@bloomberg.net Sarah McDonald
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