The Hang Seng Index plunged 305 points, or 1.2%, to close at 25,525 on Tuesday, after posting two consecutive days of gains amid widespread losses. Sentiment worsened after US index futures fell sharply following President Trump's firing of Fed Chair Lisa Cook and his threat of "200% tariffs" on China if rare earth magnet exports were restricted.

Trump also vowed to retaliate against countries that regulate major US technology companies. The index retreated from a nearly four-year high on growing concerns that mainland Chinese stocks might weaken after a month-long rally that lifted the Shanghai Composite to a decade-high.

However, further declines were mitigated by several factors, including AI optimism, attractive market valuations in China and Hong Kong, Beijing's continued policy support, and abundant liquidity due to low bank yields. Haidilao plunged 2.8% after its first-half profit missed estimates, while Innovent Biologics (-4.1%), China Unicom (-3.6%), SMIC (-3.3%), and Dongfeng Motor (-1.7%) also posted sharp losses. (alg)

Source: Fxstreet