Hong Kong stocks dropped by the most in nearly two months on Friday after US President Donald Trump said he would double the tariff on Chinese imports, escalating the trade war with Beijing and raising the risk of slowdowns in the world’s two largest economies.

High interest rates in the US, which translate directly to Hong Kong due to the territory’s dollar peg, had depressed dealmaking in the city. Coupled with its exposure to China’s economic slowdown, the city’s capital markets entered a prolonged slump.

China's mainland investors have played an unprecedented role in a rally on Hong Kong's equity market that has pushed the benchmark index to its highest level since 2022. Mainland investors typically buy or sell Hong Kong-listed shares via the southbound link of the Stock Connect scheme.

Net profit in 2024 rose 10 per cent to HK$13 billion (US$1.7 billion), aided by higher fees from handling market transactions and new stock listings.