Chinese and Hong Kong stocks extended losses on Friday, with market sentiment dampened by renewed US-China technology tensions and disappointing earnings from Alibaba Group. Despite a recent tariff truce between the two economic superpowers, investors remained cautious as fresh geopolitical risks emerged.
Mainland Stocks Weaken Across Sectors
By midday, the Shanghai Composite Index had fallen 0.52% to 3,363.32 points, while the blue-chip CSI300 index was down 0.57%. Key sectors suffered across the board:
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Financials: -1.31%
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Consumer Staples: -1.04%
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Real Estate: -0.61%
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Healthcare: -0.36%
In contrast, Shenzhen’s smaller index rose 0.34%, while the ChiNext start-up board gained 0.16%. However, Shanghai’s tech-focused STAR50 index declined 0.59%, reflecting concerns in the semiconductor and tech sectors.
Hong Kong Hit by Alibaba and Tech Tensions
The Hang Seng Index dropped 0.81% to 23,262.80, dragged down by Alibaba Group, which lost 5.3% by midday. The e-commerce giant posted quarterly revenues that missed analyst expectations, compounding bearish sentiment.
Adding further pressure, the US Commerce Department is reportedly considering additional restrictions on major Chinese tech firms. These include:
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ChangXin Memory Technologies (CXMT)
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Semiconductor Manufacturing International Corporation (SMIC)
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Yangtze Memory Technologies Co (YMTC)
Sources told Reuters that several subsidiaries of these firms could be added to the “Entity List,” restricting their access to US technology exports.
“Market focus has shifted to US-China competition in semiconductors and healthcare,” noted Dickie Wong, executive director at Kingston Securities.
Tariff Truce Not Enough to Offset Structural Risks
While the tariff truce provided a temporary lift earlier this week, analysts at Morgan Stanley highlighted that a durable resolution remains difficult due to the complex bilateral relationship. Trading volumes also declined, reflecting subdued investor interest.
Regional Performance Mixed
Elsewhere in Asia:
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MSCI’s Asia ex-Japan index slipped 0.15%
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Japan’s Nikkei index edged down 0.04%
Outlook: Tech Risks May Dominate Near-Term Sentiment
The resurgence of US-China tech rivalry, particularly around semiconductors, could weigh heavily on investor confidence in the near term. Analysts expect further volatility in Chinese equities as markets digest both earnings results and geopolitical developments.
