Chip-related stocks lead Shanghai Composite to six-week low

HONG KONG: Chinese shares fell to six-week lows on Monday, with chip-related stocks leading the decline in broad-based selling after a Reuters report that the United States was considering letting Nvidia sell H200 chips to China.

 - At the midday break, the Shanghai Composite index was down 0.3% at 3,821.68 after falling as much as 0.5% earlier in the day to hit its lowest level since October 13.

 - China’s blue-chip CSI300 index was down 0.6%.

 - Losses were broad-based, with chip-related shares leading the decline. The CSI AI Index lost 1.2%. AI chip maker Cambricon slid as much as 2.5% to a one-month low, bringing the losses so far this month to about 10%.

 - The Trump administration is considering greenlighting sales of Nvidia’s H200 artificial intelligence chips to China, Reuters reported on Friday citing sources, denting optimism towards China’s domestic substitutes.

 - Among other laggards, the CSI New Energy Vehicle Index lost 2.4% and the rare earths sector weakened 1.3%.

 - “The market has fallen into a short-term correction with fairly low sentiment, but we believe the downside for indexes is limited,” analysts at Orient Securities said in a note.

 - Institutional investors tend to take profit to close out the year and show less interest in increasing positions, analysts at Chasing Securities said in a note.

 - “We expect the market to be dominated by fluctuations before the Central Economic Work Conference in December, with large-cap blue-chip stocks potentially taking the lead during this period,” they said.

 - In Hong Kong, the Hang Seng China Enterprises Index rose 1.2%, while the Hang Seng Index was up 1.4% at 25,577.88.

 - Share of Alibaba rallied 4%, boosted by the launch of its ChatGPT-like AI assistant Qwen chatbot.

 - Market sentiment was buoyed after influential Federal Reserve policymaker John Williams said on Friday that interest rates can fall “in the near term”, boosting the likelihood of further easing in December.