China stocks head for weekly loss as AI rally loses steam
SHANGHAI: China stocks rose on Friday but were on track to end the week lower, as a rally in AI shares lost momentum and concerns over higher US yields weighed on global equities. China’s blue-chip CSI300 Index and the Shanghai Composite Index were both up 0.4% by the lunch break. Hong Kong benchmark Hang Seng rose 2.1%. For the week, the CSI300 Index was set to close nearly 1% down, while the…
China stocks were poised for a weekly decline as the momentum behind AI shares began to wane, and worries over rising US yields cast a shadow over global equities. The country's leading CSI300 Index and the Shanghai Composite Index both edged up by 0.4% by midday. In Hong Kong, the Hang Seng Index enjoyed a stronger gain of 2.1%.
Over the course of the week, the CSI300 Index was expected to close around 1% lower, while the Hang Seng Index was forecasted to finish the week up by 0.6%. Consumer staples outperformed, rising by 2.6%, driving the gains onshore. This sentiment shift came as investors moved away from AI supply chain stocks and towards more traditional sectors.
Kweichow Moutai, a leading Chinese liquor company, experienced a 2.4% surge. The tech-focused STAR50 Index experienced a 0.7% drop, and it was down nearly 4% over the course of the week. Meanwhile, the CSI Artificial Intelligence Index slipped 0.2%. Onshore A-share sentiment remained subdued this week, as higher US yield concerns and weak domestic economic data weighed on market sentiment, according to Morgan Stanley analysts.
They revised their China equity index targets downwards, reflecting a less favorable outlook for growth, tighter liquidity, less favorable flow dynamics, and increasing regulatory uncertainty. On the Hong Kong market, shares of major tech players rebounded slightly after Federal Reserve Governor Christopher Waller expressed a leaning towards maintaining interest rates steady at the US central bank's policy meeting if the following batch of inflation data indicated that price pressures were continuing to ease.
Alibaba shares gained 3.4%, and Xiaomi, a Chinese company specializing in smartphones and electric vehicles, saw its shares rise 3.1% after securing a deal with German auto dealers.
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