Trade tensions flared once again on April 7, 2025, as the U.S. reignited tariff threats against key trading partners—most notably China. In a bold move, the Trump administration reaffirmed sweeping tariffs, prompting a swift and forceful retaliation from Beijing. The tit-for-tat measures sparked fears of a prolonged economic slowdown and sent shockwaves through Asian markets.
Stocks across the region plunged. Hong Kong’s Hang Seng suffered its steepest drop since 1997, Japan’s Nikkei extended a brutal selloff, and Taiwan, South Korea, and India all saw sharp declines. Export-heavy sectors like tech and financials were hit hardest as investors scrambled to assess the fallout.
But while the selloff rattled markets, some seasoned investors see opportunity in the chaos. With volatility creating potential mispricings, many are eyeing ETFs tied to the hardest-hit regions—betting on a rebound once the dust settles.
Japan: Deep Losses in Banks and Exporters
Japan led the losses with the Nikkei 225 and Topix both plunging 7.8%, marking their steepest single-day declines since the early pandemic era. Financials bore the brunt of the selloff, with Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Financial all falling more than 8%. Exporters followed suit as global trade prospects dimmed — Toyota (NYSE:TM) dropped nearly 6%, while semiconductor test equipment maker Advantest lost 11%.
For investors eyeing a potential rebound should U.S.-Japan trade tensions ease or should domestic stimulus measures materialize,
Japan ETFs to Watch for a Potential Rebound
For U.S. investors, ETFs like the iShares MSCI Japan ETF (NYSE:EWJ), the JPMorgan BetaBuilders Japan ETF (NYSE:BBJP) ETF, and the WisdomTree Japan Hedged Equity ETF (NYSE:DXJ) offer a liquid way to re-enter the market.
For European investors, iShares Core MSCI Japan IMI (LON:IMI) UCITS ETF (IJPA), Amundi MSCI Japan UCITS ETF (ETR:LCUJ), the UBS (Lux) Fund Solutions – MSCI Japan UCITS ETF(JPY) A-acc (SIX:JPNA), and the Xtrackers MSCI Japan UCITS ETF (DBXJ) are some of largest Japan equities ETFs in the market.
Hong Kong: Tech Carnage and the Hang Seng Crash
The Hang Seng Index nosedived 13.2%, erasing over 3,000 points in its worst single-day performance since the 2008 financial crisis. Heavily weighted tech stocks like Tencent, Xiaomi (HK:1810), and Meituan suffered brutal losses, as investors pulled out en masse amid fears of prolonged policy standoffs. Losses extended to consumer and financial names, while hopes of support were briefly buoyed by reports that China may cut interest rates and accelerate stimulus efforts.
Hong Kong ETFs to Watch for a Potential Rebound
For U.S. investors seeking exposure to Hong Kong equities and technology can consider several ETFs currently tracking this market.
The iShares MSCI Hong Kong ETF (EWH) offers broad exposure to Hong Kong-listed companies, while the KraneShares Hang Seng TECH Index ETF (KTEC) focuses on the region’s leading tech firms.
Another option is the Franklin FTSE Hong Kong ETF (FLHK), which provides cost-effective access to large- and mid-cap Hong Kong stocks.
European investors can explore the HSBC Hang Seng TECH UCITS ETF (HSTE) or the UBS ETF – MSCI Hong Kong UCITS ETF A-dis (HKDU), both denominated in Hong Kong Dollars.
China: Mainland Markets Await a Policy Lifeline
China’s Shanghai Composite dropped 7.3%, while the Shenzhen Component fell 9.7%, catching up with global market turmoil after a long holiday break.
Beijing’s firm retaliation — a 34% blanket tariff on all U.S. imports — signaled a hardened stance, sparking fears of prolonged economic deceleration. All sectors declined, with outsized losses in top names like BYD, CATL, and Kweichow Moutai (SS:600519).
Investors are watching closely for Beijing’s next move. Should authorities inject liquidity or unleash a wave of consumption-focused policies, it could catalyze a strong rally in battered sectors.
China ETFs to Watch for a Potential Rebound
For U.S. investors ETFs such as the iShares China Large-Cap ETF (FXI) and KraneShares CSI China Internet ETF (KWEB) could benefit most, particularly given how oversold internet and e-commerce names have become. The iShares MSCI China ETF (MCHI) and the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) are two other ETFs to watch.
European investors can explore the iShares MSCI China UCITS ETF – Accumulating -USD (ICGA), which provides broad exposure to Chinese large- and mid-cap stocks, the iShares MSCI China A UCITS ETF – Acc- USD (CNYA), focusing specifically on A-shares listed on mainland exchanges, the Xtrackers CSI300 Swap UCITS ETF 1C – USD (XCHA), offering synthetic exposure to the CSI 300 Index of top Shanghai and Shenzhen stocks, and the Franklin FTSE China UCITS ETF – Acc – USD (FLXC), a low-cost option tracking large- and mid-cap Chinese equities – among others.
India: Global Fears Spill into Domestic Sentiment
India’s Sensex shed 3% as global risk-off sentiment spilled into domestic markets. Metal and industrial stocks led the fall, with Tata Steel (NSE:TISC) down nearly 8%, while financials and IT names weren’t spared. Although India’s direct exposure to U.S.-China trade flows is limited, its sensitivity to global capital flows and inflationary risks tied to supply chains left it vulnerable.
India ETFs to Watch for a Potential Rebound
For U.S. investors, the iShares MSCI India ETF (INDA), WisdomTree India Earnings ETF (EPI), and the Franklin FTSE India ETF (FLIN) offer access to India’s broad market, and could be positioned for a rebound if risk appetite recovers or if domestic growth proves resilient in the face of global uncertainty.
For European investors, the iShares MSCI India UCITS ETF (QDV5), the Franklin FTSE India UCITS ETF – Acc – USD (FLXI), and the Amundi MSCI India II UCIST ETF – Acc – EUR (INR) are among the largest ETFs by assets.
Taiwan: Bear Market Confirmed, but Stabilization Eyed
Taiwan's Taiex index collapsed nearly 10% on Monday, pushing its total losses beyond 20% from its recent July peak — officially entering bear market territory. Chipmaking giants TSMC and Foxconn (SS:601138) each tumbled around 10%, triggering market circuit breakers. While Taiwan was not directly targeted by Trump’s latest tariffs, its export-driven economy makes it highly susceptible to disruptions in the global supply chain.
Taiwan ETFs to Watch for a Potential Rebound
For U.S. investors, the iShares MSCI Taiwan ETF (EWT), which heavily weights TSMC, remains a key proxy for Taiwan’s equity market and semiconductor rebound prospects. A rebound in U.S. demand or a ceasefire in the tariff war could send these names sharply higher, particularly if Taiwan enacts further stabilization measures. Another name to watch is the Franklin FTSE Taiwan ETF (FLTW).
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European investors can explore the iShares MSCI Taiwan UCITS ETF - USD (IDTW), the Xtrackers MSCI Taiwan UCITS ETF 1C – USD (DBX5), and the HSBC MSCI Taiwan UCITS ETF – USD (HTWN) – among other names.
South Korea: Circuit Breakers and Policy Promises
South Korea’s KOSPI Index dropped 5.6%, extending its slide to a fourth straight session and marking a 17-month low. Major exporters like Samsung Electronics (KS:005930) and Hyundai led declines as investors reacted to China’s retaliatory tariffs and the prospect of additional U.S. levies on Korean goods. The government quickly pledged to activate a 100 trillion-won stabilization fund, while the central bank vowed to provide liquidity if needed.
South Korea ETFs to Watch for a Potential Rebound
If markets stabilize on policy support, the iShares MSCI South Korea ETF (EWY) could attract fresh inflows. Its exposure to major conglomerates positions it well for a turnaround, particularly if sentiment improves in the global electronics supply chain. Other ETFs to watch are the Franklin FTSE South Korea ETF (FLKR), and the Matthews Korea Active ETF (MKOR).
European investors can watch the Franklin FTSE Korea UCITS ETF – Acc- USD (FLXK), the iShares MSCI Korea UCITS ETF USD (Dist) – USD (IDKO), and the Amundi MSCI Korea UCITS ETF Acc- EUR (KRW).
Conclusion: Opportunities Amid the Chaos
The shockwaves from April’s trade war escalation may have rattled markets, but history shows that policy responses can pave the way for sharp rebounds. For investors with a contrarian eye, today's turmoil could become tomorrow's opportunity — especially through region-specific ETFs that offer diversified, targeted exposure to potential recovery zones.