China, Hong Kong stocks slide as weak data, Mideast war sap risk appetite

SHANGHAI: Mainland China and Hong Kong stocks slid on Monday as investor focus shifted from US-China talks to escalating tensions in the Middle East and a global bond selloff, while a string of weaker-than-expected activity data also weighed on sentiment. 

At the midday break, the Shanghai Composite Index edged 0.2% lower, while China’s blue-chip index CSI300 lost 0.7%.

Hong Kong’s benchmark Hang Seng Index led losses across Asian markets, down 1.4%, mirroring an overnight decline on Wall Street.

Market sentiment weakened after data showed China’s growth lost momentum in April, with industrial output and retail sales both sharply missing expectations as the world’s second-largest economy grappled with higher energy costs from the Iran war and persistently weak domestic demand.

Fresh attacks in the Gulf pushed oil prices and bond yields higher, further dampening investors’ risk appetite.

A drone strike caused a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia said it intercepted three drones. US President Donald Trump also warned Iran to move “fast” on a deal.

Investors are increasingly concerned that central banks may tighten policy further to contain inflation pressures, overshadowing the Trump-Xi summit, which produced limited concrete outcomes.

“In our view, the summit delivered short-term stabilization for both leaders,” Nomura economist Lu Ting said, referring to a new paradigm described by Washington as a pragmatic arrangement and by Beijing as a “Constructive Strategic Stability US-China Relationship”.

“We believe the summit is overall a success, though it might disappoint some people that had too high expectations right before the summit.”

China-listed agriculture stocks fell more than 2% after the White House said Beijing committed to buying at least $17 billion worth of US agricultural products annually from 2026 to 2028.

In contrast, Chinese chipmakers rose after US officials indicated during the two-day summit in Beijing last week that semiconductor export controls were not a key issue, suggesting any breakthrough on Nvidia’s H200 chip sales to China remains distant.

A sub-index tracking consumer staples dropped 1.5%.‑Reuters