Asian markets retreat after Trump signs Hong Kong bill

Asian markets retreated after US President Donald Trump signed a bill supporting Hong Kong protesters, a move that could potentially infuriate Beijing and complicate the US-China trade talks.

China’s Shanghai Composite dropped 0.5%. South Korea’s Kospi index fell 0.4%. Hong Kong’s Hang Seng Index slipped 0.2%, while Japan’s Nikkei 225 moved down 0.1%.

Some Chinese tech stocks advanced in Hong Kong, bucking the weaker trend.

Smartphone manufacturer Xiaomi climbed 2.3%. The company reported late Wednesday that its revenue reached 53.7 billion yuan ($7.6 billion) for the third quarter, in line with market expectations, according to Refinitiv data. Its net profit increased slightly to 2.5 billion yuan ($355 million) during the period, worse than expected. But the company guided investors to an adjusted profit figure that met analyst estimates.

Alibaba surged 5.3% in Hong Kong to 203.40 Hong Kong dollars ($26). It’s now up nearly 16% since its debut earlier this week.

Trump signed the Hong Kong Human Rights and Democracy Act into law Wednesday in the United States. The new law would require the United States to annually confirm Hong Kong’s special freedoms are being maintained by Beijing. Failure to do so could result in Washington withdrawing the city’s special status, a potentially massive blow to Hong Kong’s economy and its status as a financial hub.

Trump’s move could heighten tensions between Beijing and Washington, as the two sides had been working toward reaching a trade deal.

China’s Ministry of Foreign Affairs blasted the law on Thursday, saying that “such an action has seriously interfered in Hong Kong’s affairs and China’s domestic politics.”

“Such plainly bullying behavior is firmly opposed by the Chinese government and Chinese people,” the agency said.

Markets had reacted positively this week amid hopes for a US-China trade deal. Major US indexes posted fresh record highs on Wednesday. European stocks are also at multi-year highs.