HONG KONG: China stocks rose on Tuesday, driven by strong performances in chip-related shares, while Hong Kong declined due to losses in Tencent after the US added the tech giant and other companies to a list of firms alleged to be working with China’s military.
China’s blue-chip CSI300 Index and the Shanghai Composite Index climbed 0.7% each, both snapping a four-session losing streak.
Leading the gains, shares of artificial intelligence-related companies jumped 3.4% and semiconductor firms advanced 3.3%. AI Chipmaker Cambricon surged more than 10%.
Hong Kong benchmark Hang Seng declined 1.2%.
The US Defense Department said on Monday it has added Tencent and battery maker CATL to a list of firms allegedly aiding Beijing’s military.
The list included chipmaker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics .
At the close, Hang Seng heavyweight Tencent slumped 7.3% and logged a fifth consecutive session of decline. It also weighed on the technology index, which declined nearly 1%.
On the mainland, CATL dropped 2.8%, Quectel tumbled 6.2% and Autel Robotics retreated 1.7%.
Analysts said although the inclusion should not have a material impact on the companies, the move would keep investors on the sidelines.
“The move implies continued volatility particularly ahead of (US President-elect Donald) Trump’s promise of added tariffs,” said Kai Wang, Asia equity market strategist, Morningstar.
Another concern was the move may prevent certain funds from owning the stocks due to geopolitical risks, which would mean they could go underweight on those stocks even more, Kai Wang said.
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