Chinese stocks close flat after hitting six-week low

HONG KONG: Chinese shares closed flat on Monday after hitting six-week lows, struggling to shake off recent weakness as investors continued to grapple with geopolitical tensions.

At market close, the Shanghai Composite index edged up 0.05 percent to 3,836.77 after falling as much as 0.5 percent earlier in the day to the lowest since October 13.

The blue-chip CSI300 index closed down 0.1 percent.

Lifting the market on Monday, the CSI Defence Index rallied 3.5 percent after China’s foreign minister said Japan has crossed a red line with Taiwan comments, the latest remarks in a row that has shaken relations.

Chip-related shares bounced back after taking a beating from the report that the Trump administration is mulling greenlighting sales of Nvidia’s H200 artificial intelligence chips to China.

The CSI AI Index rose 0.8 percent and the CSI Semiconductor Index jumped 1.8 percent at close. The banking sector declined 0.8 percent and the energy sector lost 1.7 percent, weighing on the markets.

Monday’s choppy session extended recent weakness in Chinese stocks, which logged their biggest weekly loss since December amid a global tech decline and policy vacuum.

“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,” analysts at Chasing Securities said in a note.

The A-shares’ bull market still has room to run, and driven by geopolitical tensions and industry trends, the tech sector will continue to be the medium to long-term main theme of the market, they added.

In Hong Kong, the Hang Seng Index was up 2 percent at 25,716.50, and the tech index jumped 2.8 percent.

Shares of Alibaba rallied 4.7 percent, boosted by the launch of its ChatGPT-like AI assistant Qwen chatbot.

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