SHANGHAI: Hong Kong stocks fell for a fourth straight session to a two-week low on Wednesday, following an overnight drop on Wall Street, while China shares rebounded.
Market sentiment remains subdued as the Sino-Japan diplomatic crisis deepens, adding to economic worries with no policy easing in sight.
Hong Kong benchmark Hang Seng closed down 0.4 percent logging a four-day losing streak.
In mainland China, the blue-chip CSI300 Index climbed 0.4 percent, while the Shanghai Composite Index bounced 0.2 percent.
Risk appetite was weak after US stocks fell for a fourth day on Tuesday amid valuation worries and doubts over an interest rate cut next month.
The mood was further soured by deteriorating relations between Beijing and Tokyo over Japanese Prime Minister Sanae Takaichi’s comments on Taiwan.
Escalating geopolitical tensions could add fresh pressure to China’s struggling economy.
“After six months of improving sentiment, China’s growth outlook took a sharp turn in November,” BofA Securities said in its latest Asia Fund Manager Survey, where 29 percent of respondents now expect a weaker economy. “Despite this, investors foresee limited policy easing.”
But investors bid up China-listed aquatic stocks, betting they will benefit from the China-Japan spat.
Shares of CNFC Overseas Fisheries, Zhanjiang Guolian Aquatic Products, Dahu Health Industry and Shandong Oriental Ocean Sci-Tech surged after media reports that China notified Japan it will ban all imports of Japanese seafood.
Meanwhile, energy and financial shares rose while real estate and media stocks dropped.
In Hong Kong, tech shares led the decline. Xiaomi plunged 5 percent after the company warned of further hikes in smartphone prices next year due to soaring memory chip costs. Chinese search engine Baidu eased 0.2 percent after reporting a 7 percent fall in quarterly revenue.
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