China, Hong Kong stocks decline as sentiment hit by global bond selloff

HONG KONG - China and Hong Kong stocks dipped on Wednesday as a global bond selloff and soaring oil prices dampened investor confidence. The CSI 300 Index, representing blue-chip Chinese stocks, fell 1.3%, while the Shanghai Composite Index slipped 0.8%. Hong Kong's Hang Seng Index decreased by 1%. These declines mirrored Wall Street's overnight losses as the global bond selloff intensified, with the 10-year US Treasury yield reaching its highest level since 2023.

Investors grew more optimistic about a potential September interest rate hike in the US, given the escalating tensions in the Middle East, which pushed oil prices higher. Gold equities suffered the most significant decline, down 3%, as gold's value is closely tied to interest rates. Meanwhile, auto shares plunged nearly 2% following China's announcement of guidelines to promote fair competition abroad.

Almost every sector, including technology, new energy, and real estate, saw declines by midday, although defense stocks managed to outperform. Hong Kong's Hang Seng Tech Index was hit the hardest, losing 1.5%. The online fast-fashion retailer Shein, which had a weak debut on the Hong Kong stock market, saw its shares drop 2.2% after a lackluster performance on Tuesday.

Gary Ng, a senior Asia-Pacific economist at Natixis, attributed the poor performance to Shein's struggles amid growing concerns over tariffs on small packages. The Shenzhen index dropped 1.27%, the ChiNext Composite index fell 2.18%, and Shanghai's tech-focused STAR50 index was down 1.32%. On the geopolitical front, Chinese Premier Li Qiang assured US firms that they are welcome to expand and strengthen their presence in the Chinese market during a meeting with a delegation from the US-China Business Council in Beijing.