HONG KONG: China stocks retreated from a 10-year high on Friday, while Hong Kong shares logged the longest losing streak since March, as fresh geopolitical frictions curbed investors’ risk appetite and prompted profit-taking.
China’s blue-chip CSI300 Index dropped 2 percent, the biggest single-day decline in nearly five weeks.
The Shanghai Composite Index fell 0.9 percent to 3,897.03, after touching its highest since 2015 on Thursday.
Hong Kong’s benchmark Hang Seng Index slipped 1.7 percent, its fifth consecutive 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 also tightened checks on Nvidia’s artificial intelligence processor imports at major ports, per the Financial Times.
“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, referring to Presidents Donald Trump and Xi Jinping’s possible meeting in South Korea this month.
The CSI Rare Earth Index declined 2.9 percent. Shenzhen-listed shares of battery maker Contemporary Amperex Technology Co Ltd fell 6.8 percent and CALB declined 9.7 percent.
Profit-taking in chip-related shares ramped up following recent outperformance. CSI Semiconductor Index slipped 5 percent, AI sector was down 4.8 percent and IT sector retreated 5.2 percent.
Electric vehicle-related shares were also under pressure with New Energy Vehicles Index down 6 percent, after regulators revised tax-exemption rules.
Investors awaited a key set of trade data due Monday.
“Market sentiment is shifting gears, moving from a liquidity narrative toward profit-driven dynamics,” Yintai Securities said in a note.
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