China stocks slip as oil price surge outweighs market support efforts
- China’s blue-chip CSI300 Index and the Shanghai Composite Index fell 1.2% by lunch break
HONG KONG: China and Hong Kong stocks retreated on Friday on higher oil prices, fuelling inflation fears and dampening investor sentiment.
China’s blue-chip CSI300 Index and the Shanghai Composite Index fell 1.2% by lunch break. Hong Kong benchmark Hang Seng dropped 1.7%, while Hang Seng Tech lost 1.7%.
Brent crude jumped to above $100 a barrel after US President Donald Trump promised “major military punishment” for Iran and its Houthi allies on Thursday. Geopolitical uncertainties and higher oil prices have weighed on regional market performance.
The upcoming listing of Chinese memory giant CXMT has also weighed on market sentiment, as investors fear such mega IPOs will sap market liquidity. Semiconductor and aviation stocks gained by midday while most sectors dropped.
“Investors remained cautious ahead of the July Politburo meeting and the anticipated IPO of CXMT, despite continued market stabilisation efforts from the ‘national team’ in recent weeks,” Morgan Stanley analysts said in a note.
China’s securities regulator pledged on Thursday to prevent risks in key areas and strengthen policy reserves to respond to global market fluctuations and cross-border risk transmission, according to a meeting readout.
Analysts said the market is closely looking for any change in policy direction or stimulus measures at the Politburo meeting next week.
The weak second-quarter data prints call for support measures, DBS analysts said in a note.
The smaller Shenzhen index was down 1.96%, the start-up board ChiNext Composite index was weaker by 1.78% and Shanghai’s tech-focused STAR50 index was up 0.27%.‑Reuters
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