HONG KONG: China and Hong Kong stocks weakened on Wednesday as slower services sector growth and escalating trade frictions with the US dampened investor sentiment.
At the close, the Shanghai Composite index was down 0.42% at 3,364.65. The blue-chip CSI300 index dropped 0.54%, with the consumer staples sector slipping 0.67% and the real estate index losing 2.39%.
In Hong Kong, the Hang Seng Index weakened 0.02% at 19,742.46.
China’s services activity expanded at a slower pace in November, with the Caixin/S&P Global services purchasing managers’ index (PMI), falling to 51.5 from 52.0 in October, as the economy braces for a rocky ride of more US tariffs under a second Trump administration.
Sentiment was also jittery following Beijing’s export ban to the United States of critical minerals that have widespread military applications, which escalated trade tensions the day after Washington’s latest crackdown on China’s chip sector.
“This new salvo intensifies fears of economic decoupling, as the looming US tariff barrage hangs over Asia’s export-driven economies,” said Stephen Innes, managing director at SPI Asset Management.
The repercussions of these tit-for-tat measures could significantly disrupt supply chains, with the semiconductor and technology sectors squarely in the crosshairs, Innes added.
Rare earth and chip sectors gave up earlier gains to end the day lower. The CSI Rare Earth Industry Index lost 0.12%, while the CSI Semiconductor Industry Index weakened 0.33%.
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