HONG KONG: Chinese and Hong Kong stocks dropped on Friday, as market sentiment came under pressure from renewed US-China tech tensions and a disappointing earnings report from Alibaba.
Both markets ended the week positively, with the Hang Seng Index posting a fifth consecutive weekly gain.
At the close, the Shanghai Composite index was down 0.4%; while China’s blue-chip CSI300 index fell 0.46%.
Liquor and insurance companies led the decline, both dropping 1.4%.
In Hong Kong, the Hang Seng Index retreated 0.46%.
Index heavyweight Alibaba Group lost more than 4% after the e-commerce giant posted quarterly revenue below analysts’ estimates on Thursday.
On the geopolitical front, the US Commerce Department is considering placing more Chinese companies, including ChangXin Memory (CXMT), on its restricted export list, a person familiar with the matter told Reuters.
The Bureau of Industry and Security is also looking at adding subsidiaries of Semiconductor Manufacturing International Corporation and Yangtze Memory Technologies Co to the “Entity List”, the source said.
“Market focus has shifted to the US-China competition on other fields, such as semiconductor and healthcare, after the two countries significantly reduced tariffs for each other,” said Dickie Wong, executive director of research at Kingston Securities.
While US-China tariff truce is a positive surprise to the market, a durable resolution remains challenging, given the complex bilateral relationship, Morgan Stanley analysts said in a note, adding sentiment on mainland A-shares edged down this week with lower trading volume.
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