HONG KONG: China stocks fell on Friday as persistent Middle East tensions dented investor sentiment, while Hong Kong shares were buoyed by a rally in semiconductor stocks following DeepSeek’s new AI release.
By the close, the blue-chip CSI300 Index was down 0.35 percent. The Shanghai Composite Index closed 0.33 percent lower, but marked the third straight week of gains.
Hong Kong’s benchmark Hang Seng ticked up 0.2 percent, while Hang Seng Tech rose 0.8 percent.
Stalled US-Iran ceasefire talks dampened investor confidence. Iran demonstrated its control over the Strait of Hormuz on Thursday with video of its commandos storming a huge cargo ship.
Also weighing on sentiment, the White House accused China of stealing US AI labs’ intellectual property on an industrial scale, putting pressure on the country ahead of a summit between US and Chinese leaders next month.
Risk-off takes hold once again amid continued Middle East concerns and a stronger US dollar, KraneShares analysts said in a note.
The telecommunications sector lost more than 4 percent, leading declines in China.
Leading optical module firm Eoptolink’s shares slumped 12 percent after posting weaker-than-expected first-quarter earnings.
Meanwhile, Chinese AI startup DeepSeek launched a preview of its highly anticipated new model, the V4, on Friday.
DeepSeek said the latest model outperforms other open-source models in world-knowledge benchmarks. Semiconductor and chip shares rose as the market expects the new model to run on homegrown chips.
CSI Semiconductor Industry index jumped 1.8 percent. In Hong Kong, Huahong Semiconductor and SMIC jumped 15 percent and 10 percent, respectively.
HSBC analysts expect more foreign fund inflows into China’s stock markets this year, with Fed funds futures pricing in at least one 25-basis-point cut in 2026.
The smaller Shenzhen index ended down 0.6 percent and the start-up board ChiNext Composite index was weaker by 1.41 percent.
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