China stocks come off 10-year high; HK extends losing streak on Sino-US tensions

HONG KONG: China stocks retreated from a 10-year high on Friday while Hong Kong shares were headed for the longest losing streak since March, as fresh geopolitical frictions curbed risk appetite and profit-taking pressure rose.

• China’s blue-chip CSI300 Index dropped 1.3%, while the Shanghai Composite Index fell 0.5% after touching its highest since 2015 on Thursday.

• Hong Kong’s benchmark Hang Seng Index was down 1.1%, its fifth straight decline and the longest losing streak since March.

• Sentiment weakened after China expanded rare earths export controls, following US lawmakers’ call earlier this week for broader bans on the export of chipmaking equipment to China.

• Beijing has added five elements and tighter scrutiny for semiconductor users, and announced curbs on items related to lithium batteries and artificial graphite anode materials.

• The CSI Rare Earth Index declined 2%. Shenzhen-listed shares of battery maker Contemporary Amperex Technology Co Ltd fell 6.3% and CALB was down 8.6%.

• “We believe the US and China could both be strengthening their leverage in trade talks, ahead of a potential summit between the two presidents,” Citi analysts said in a note.

• Profit-taking in chip-related shares also persisted following recent outperformance. The CSI Semiconductor Index slipped 4.1% and the AI sector was down 3.4%.

• The electric vehicle sector was also under pressure with the New Energy Vehicles Index down as much as 5.2%, after regulators revised tax-exemption rules.

• Investors await China’s trade data due Monday.

• “Market sentiment is shifting gears, moving from a liquidity narrative toward profit-driven dynamics,” Yintai Securities said in a note.

• Overall, the upward momentum of A-share markets is expected to slow down in the fourth quarter, with benchmark indexes likely to be dominated by sideways consolidation and volatility, they added.