China stocks slip as investors take profit, awaiting possible US-Iran talks

SHANGHAI: Mainland China stocks edged lower on Friday as investors locked in profits after recent gains and stayed on the sidelines, awaiting potential talks between the US and Iran over the weekend for clearer signals on whether the weeks-long war might end.  

A 10-day ceasefire between Lebanon and Israel went into effect on Thursday and President Donald Trump said the next meeting between the United States and Iran may take place over the weekend, adding to optimism that the Iran war could be nearing an end.

At the midday break, the benchmark Shanghai Composite index slipped 0.3% and looked set to snap five straight winning sessions.

The blue-chip CSI300 Index also lost 0.3%. In Hong Kong, the benchmark Hang Seng Index dropped 1.32%, while the city’s tech shares lost 1.66%.

“In the very near term Hong Kong could have bigger rebound upside vs. the A-share market given its higher correlation with the global market,” analysts at Morgan Stanley said in a note.

“While near-term tensions have eased, we continue to see energy security and high-end manufacturing as key medium-term themes, with China well positioned to gain share amid a global capex upcycle and the ongoing push for self-sufficiency.”

The US investment bank said they maintain an “overweight” stance on materials, energy, selected industrials, and semiconductors shares.

Liquor and consumption were among the biggest losers in morning deals, dragged lower by Kweichow Moutai’s weaker annual results. Meanwhile, 5G communications shares outperformed, with a sub-index tracking the industry jumping 3.37% at the midday break.

China will continue to diversify its energy imports and boost energy reserves to help enhance its capacity to cope with an “emergency situation”, Wang Changlin, vice chair of the country’s state economic planner, said on Friday.

China is due to release its monthly fixing of the benchmark loan prime rate on Monday.

Major global investment banks now expect Beijing to keep official interest rates steady this year, scaling back earlier rate-cut calls.‑Reuters