Hong Kong’s capital market slipped on Thursday after the United States announced "reciprocal tariffs" on its trading partners, with the benchmark Hang Seng Index falling 1.52 percent to 22,849.81, hitting a new closing low within the last month.

The Hang Seng Tech Index and China Enterprises Index fell 2.09 percent and 1.31 percent respectively.

According to US announcement, the new tariffs imposed on China will also apply to the Hong Kong and the Macao special administrative regions.

READ MORE: China to resolutely counter US "reciprocal tariffs"

The US also canceled its tariff exemption for small packages from the Chinese mainland and Hong Kong. The stocks of Alibaba and JD.com fell by about 5 percent on the same day.

“The Hong Kong stock market is affected for sure. We were already expecting a high tariff, but the rate is relatively higher than expected,” said Tom Chan, permanent honorable president and director of the Institute of Securities Dealers.

“But the market downturn will not last for long. There are going to be some hard times ahead but we have better expectations management and better preparations in place than we had for Trump’s version 1.0 last time,” Chan said.

Another analyst Curtis Yeung Wan-yui, senior strategist of UOB Kay Hian (Hong Kong), also agreed that Hong Kong’s stock market will not go too bearish. “US Treasury Secretary Scott Bessent said that the tax rate is the upper limit of the range, which means that the worst-case scenario may have already occurred. So there is a chance that the tariffs will be lowered through negotiations in the future.”

Some analysts are adopting a more positive attitude. “As Hong Kong is running a trade deficit with the US, and China trade with the US has already been reduced a lot since 2018, the effect on the stock markets of Hong Kong and the Chinese mainland will be minimal. On the other hand, the US stock market may drop a lot because of the reciprocal tariff,” said Terence Chong Tai-leung, executive director of Lau Chor Tak Institute of Global Economics and Finance, Chinese University of Hong Kong.

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“China was one of the well-prepared countries for the tariff, including through the proposal to prioritize domestic consumption as the top economic priority at the two sessions in March, setting an economic growth target of 5 percent, and raising the deficit ratio to stimulate the economy with more fiscal expenditures.” said Yeung.

Contact the writer at thor_wu@chinadailyhk.com