Trade Tensions Hit China Stocks, Hong Kong Boosted by Tech Surge

China stocks fell to near five-month lows as trade tensions impacted electric vehicle shares, offsetting gains in banking shares. In contrast, Hong Kong shares surged, driven by hopes of a U.S. Fed rate cut and better-than-expected tech sector results, with Xiaomi reaching a three-month high.

China stocks fell on Thursday, reaching close to five-month lows as trade tensions severely affected electric vehicle stocks, erasing gains seen in banking shares.

Conversely, Hong Kong's market was buoyant, bolstered by speculation of a U.S. Federal Reserve interest rate cut next month. The tech sector propelled market gains, with Xiaomi hitting a three-month high on better-than-expected second-quarter revenues.

The Shanghai Composite index and the CSI 300 index each dipped by 0.3%, while Hong Kong's Hang Seng index rose by 1.4%. Notably, the market faced declines in the EV sector as Brussels introduced a revised tariff plan on China-made EVs, causing the sector to slide 1.2%. However, stocks linked to popular video game "Black Myth: Wukong" also saw losses, with Huayi Brothers plunging 13%.