China's Markets Remain Flat Amid AI and Regional Uncertainties

Chinese shares remained flat as investors turned defensive amid concerns about AI spending and regional tensions. While the Shanghai Composite Index rose slightly, the Hang Seng Index dropped. Defense stocks surged due to U.S. arms deals, but tech and property stocks remained weak.

On Thursday, China's stock markets experienced little change as investors moved towards defensive sectors owing to apprehensions about artificial intelligence investments and regional tensions. The Shanghai Composite Index, at the midday break, increased by 0.2% to reach 3,876.40, while the blue-chip CSI300 Index saw a decline of 0.6%.

In contrast, the Hong Kong market's Hang Seng Index weakened by 0.4%, with the Hang Seng Tech Index losing 1.3%, marking a total reduction of 20% since its peak in October. Notably, China's CSI Defense Index climbed by over 2% to a two-month peak as the United States approved its largest-ever arms package of $11.1 billion for Taiwan.

Defensive sectors like banks and energy witnessed gains, with the CSI Banks Index rising 1% and energy sector index up by 0.8%. However, sectors impacted by concerns over AI funding, such as tech and real estate, lagged behind, fueling continued market volatility, as analysts from Huaan Securities highlighted.

(With inputs from agencies.)