Chinese ADRs fell in morning trading amid lower expectations for interest-rate cuts by the Federal Reserve and a tight US presidential election that will determine the future of its relationship with China. XPeng fell 6%; NIO fell 4%; Bilibili, Tencent Music, and Alibaba fell 3%; NetEase, iQiyi, and Baidu fell 2%.

“Market sentiment in both Hong Kong and the mainland turned weak as some investors decided to lock up gains over the past two days by reducing their holdings,” said Ivan Li, a fund manager at Loyal Wealth Management in Shanghai. “The market outlook remains cloudy since most investors are cautious on equity investment before China unveils a strong stimulus package to buoy the slowing economy and the embattled property sector.”

In addition, as the world is waiting for the fast-approaching US election, Beijing may be holding onto new policy measures until after the election result, according to Dickie Wong, executive director at Kingston Securities.

“The outlook of the US-China relationship is dependent on the US election result, including the tariff situation,” he said. “I think the mainland government will likely retain some large-scale measures and launch them later.”

In the case of a “market-friendly” Donald Trump presidency, “a second trade war would be much harder to navigate, creating a wide range of winners and losers across emerging markets, said Robert Gilhooly, senior emerging markets economist at Abrdn. “This is a particular risk for China.”