Geopolitical Concerns Weigh on China and Hong Kong Markets

China and Hong Kong stock markets closed the week lower despite gains on Friday due to geopolitical tensions and unremarkable guidance from China's annual parliamentary meeting. While the Hang Seng Tech Index rose, consumer staples led onshore gains. Investors sold a record HK$27.7 billion via the Stock Connect scheme.

China and Hong Kong stock markets ended the week on a down note, despite Friday rallies. Investors were cautious due to escalating geopolitical tensions and limited new insights from the recent annual parliamentary session.

The blue-chip CSI300 Index in China closed with a 0.3% rise on Friday, and the Shanghai Composite ticked up by 0.4%. Meanwhile, the Hang Seng Index in Hong Kong gained 1.7%. However, throughout the week, the CSI300 fell 1.1%, and the Hang Seng decreased by 3.3% due to fears that broader Middle East conflict may trigger energy price hikes, thus affecting inflation and delaying rate cuts.

Key sector performances were mixed. Consumer staples surged 2.5%, while oil & gas fell 1.9%. In a surprising twist, the Hang Seng Tech Index emerged from a four-day losing streak with a 3.2% increase following JD.com's announcement to cut back on its food delivery investments. The National People's Congress maintained its tech-first policy but offered little positive surprises, as noted by Morgan Stanley analysts. China faces record share sales via the Stock Connect scheme, though they remain committed to growing equity financing.