China stocks fall as geopolitical fears offset stronger economic data

HONG KONG: Chinese stocks closed lower on Wednesday, as the widened US chip export ban heightened investor concerns about geopolitical risks, even as the third-quarter economic growth was above expectations.

The broader sentiment darkened after a blast at a Gaza hospital dimmed hopes for containing the Middle East conflict and complicated US President Joe Biden’s already fraught trip to the region.

China’s blue-chip CSI 300 Index ended down 0.79%, while the Shanghai Composite Index dipped 0.80%.

Hong Kong’s Hang Seng Index edged down 0.23%, while the Hang Seng China Enterprises Index slid 0.28%.

China’s gross domestic product (GDP) grew 4.9% in July-September, beating analysts’ forecasts, consumption and industrial activity in September also surprised on the upside.

JP Morgan and Nomura lifted their forecast for China’s 2023 GDP.

Third-quarter GDP and September activity data, National Day Golden Week tourism revenue, as well as high-frequency trackers jointly point to “more green shoots” in the economy and indicate the sequential growth momentum continues to recover on the back of the ongoing policy easing”, Goldman Sachs said in a note.

“If this easing continues, full-year 2023 GDP growth could still hit the official 5%. The risk is if Beijing normalises policy pre-maturely, then growth could undershoot the official target as private sector and consumer confidence are still feeble,” said Chi Lo, senior market strategist for Asia Pacific at BNP Paribas Asset Management.

The Biden administration’s latest restrictions on more advanced artificial intelligence (AI) chip exports to China weighed on market sentiment.

In China A-shares, 5G communications stocks and AI stocks dropped 2.1% and 1.8%, respectively, leading the decline.

Hong Kong-listed tech firms tumbled 1.7%, with Lenovo Group slumping 10%.

BYD’s shares in Shenzhen jumped 4.7% as the electric vehicle giant sees its third-quarter net profit to as much as double.