HONG KONG: China stocks retreated from a 10-year high on Friday while Hong Kong shares were headed for the longest losing streak since March, as fresh geopolitical frictions curbed risk appetite and profit-taking pressure rose.
China’s blue-chip CSI300 Index dropped 1.3%, while the Shanghai Composite Index fell 0.5% after touching its highest since 2015 on Thursday.
Hong Kong’s benchmark Hang Seng Index was down 1.1%, its fifth straight decline and the longest losing streak since March.
Sentiment weakened after China expanded rare earths export controls, following US lawmakers’ call earlier this week for broader bans on the export of chipmaking equipment to China.
Beijing has added five elements and tighter scrutiny for semiconductor users, and announced curbs on items related to lithium batteries and artificial graphite anode materials.
The CSI Rare Earth Index declined 2%. Shenzhen-listed shares of battery maker Contemporary Amperex Technology Co Ltd fell 6.3% and CALB was down 8.6%.
“We believe the US and China could both be strengthening their leverage in trade talks, ahead of a potential summit between the two presidents,” Citi analysts said in a note.
Profit-taking in chip-related shares also persisted following recent outperformance. The CSI Semiconductor Index slipped 4.1% and the AI sector was down 3.4%.
The electric vehicle sector was also under pressure with the New Energy Vehicles Index down as much as 5.2%, after regulators revised tax-exemption rules.
Investors await China’s trade data due Monday.
“Market sentiment is shifting gears, moving from a liquidity narrative toward profit-driven dynamics,” Yintai Securities said in a note.
Overall, the upward momentum of A-share markets is expected to slow down in the fourth quarter, with benchmark indexes likely to be dominated by sideways consolidation and volatility, they added.
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