China stocks hit 3-month low on slowdown worries, Iran war ahead of CXMT IPO

SHANGHAI: Chinese stocks fell to a three-month low on Tuesday and Hong Kong shares also declined, as concerns over a slowdown in China’s economy and escalating tensions in the Middle East weighed on sentiment.

Risk appetite was also curbed by the mega IPO of Chinese memory chipmaking giant Changxin Memory Technologies (CXMT), despite solid June trade data.

China’s large-cap index CSI300 was down 0.4% by the lunch break, while the Shanghai Composite Index dropped 0.7%, both hitting their lowest levels since early April.

In Hong Kong, the benchmark Hang Seng Index retreated 0.5%.

China is due to release second-quarter GDP data on Wednesday that is expected to show economic growth slowed to 4.5% in the second quarter from 5% in January-March, according to a Reuters poll.

Sentiment was also dampened by renewed tensions in the Middle East, as the US military carried out more strikes against Iran on Monday with President Donald Trump reinstating a blockade of Iranian shipping.

“Geopolitical uncertainty roiled market mood and expectations of global liquidity,” Guotai Haitong Securities said in a note.

“Fluctuations of risky assets will likely increase.” Also adding pressure to domestic market liquidity, China’s top memory chipmaker CXMT starts book-building on Wednesday to raise 29.5 billion yuan ($4.35 billion).

The company is scheduled to list on July 27, according to sources. Chipmakers, big data and computer stocks slumped in China as investors prepared to subscribe to CXMT’s new shares.

Artificial intelligence-related shares also dropped as surging volatility in Korean chipmakers rekindled fears of an AI-driven market bubble. In contrast, energy stocks jumped as renewed fighting in the Middle East boosted oil prices.

In Hong Kong, energy and shipping stocks rose, while AI stocks tumbled.‑Reuters