HONG KONG: China stocks tumbled on Friday and were heading toward their biggest weekly decline since late December, as technology shares joined a global sell-off.
– The Shanghai Composite Index dipped as much as 2.3% to the lowest since October 17 before narrowing the loss to 1.9% as of the midday trading break. The blue-chip CSI 300 Index was also 1.9% lower.
– Both gauges are now down roughly 3.3% for the week, the worst performance since December 30, 2024, if sustained.
– following their US counterparts’ weak session on Wall Street overnight. The CSI AI Index lost 3.5% and the CSI Semiconductor Index declined 3.1%.
– Defensive plays also posted losses, with the banking sector slipping 1%, liquor down 0.8% and consumer staples declining 0.5%.
– In Hong Kong, the benchmark Hang Seng Index slid 2.1% to a five-week low, and the tech index tumbled 3.1% to a three-month low.
– “Market sentiment weakened toward year-end on lower risk appetite and recent muted economic data,” analysts at Morgan Stanley said in a note.
– Index upside is modest with moderate earnings growth and valuation settling at a higher regime, they added.
– The next policy window to watch for markets will be after the Central Economic Work Conference (CEWC) in mid-December, analysts at Citi said.
– However, despite the weakness in China shares, UBS said investors don’t appear to worry too much that the US selloff may not impact flows into Asia and China markets immediately.
– “If the liquidity-driven US selloff persists long enough to deflate the AI bubble healthily, it could benefit emerging markets, particularly China.”
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