Semiconductors lift China stocks; Hong Kong falls as Alibaba weighs

China stocks saw a slight increase on Thursday, driven by gains in the semiconductor sector, while Hong Kong shares continued to decline as major players Alibaba and CK Hutchison weighed on the market. The CSI300 Index in China rose by 0.1% during the midday session, and the Shanghai Composite Index climbed by 0.2%. Hong Kong's main benchmark, the Hang Seng Index, dropped by 0.9%.

Alibaba Group's stock fell by 5% by midday following the company's announcement that it would go ahead with the spin-off of its chip business, T-Head, which in turn pulled down the Hang Seng Tech Index by 1.4%. This decline also comes amidst expectations of subdued consumer spending for this year's Singles' Day shopping event, as Hong Kong consumers become more cautious with their spending.

In mainland China's A-shares, semiconductor and AI-related stocks outperformed the market, mirroring the gains observed overnight on Wall Street. Conversely, gold and robotics shares led the decline. Larry Hu, Chief China Economist at Macquarie Group, expressed disappointment with the performance of Chinese equities this year, primarily attributing it to the absence of stimulus policies to bolster domestic demand.

Looking ahead to 2027, Hu stated that the success of exports will be crucial in determining the extent of stimulus provided by Beijing to meet its GDP growth target, thereby influencing the performance of Chinese equities. The Shenzhen index saw a modest rise of 0.08%, while the ChiNext Composite index and the Shanghai STAR50 index both climbed by 0.06% and 2.35%, respectively.