Trade Tensions Weigh on China and Hong Kong Stocks

China and Hong Kong stock markets dipped amid slower services sector growth and growing U.S-China trade frictions. Key indices such as the Shanghai Composite and Hang Seng reflected declines, influenced by trade concerns including an export ban and U.S tariff threats, impacting technology and semiconductor sectors.

China and Hong Kong stock markets experienced declines on Wednesday, ending the day with notable drops across several indices. The Shanghai Composite was down 0.42% to close at 3,364.65, while the blue-chip CSI300 index fell 0.54%, primarily led by losses in consumer staples and real estate stocks.

A significant factor in this decrease was the slower growth in China's services sector, as the Caixin/S&P Global services PMI registered 51.5 in November, a slight dip from October's 52.0. U.S.-China trade tensions escalated further following Beijing's export ban on crucial minerals, marked by widespread military applications. Additionally, sentiment was soured by Washington's continued pressure on China's chip industry.

According to Stephen Innes, managing director at SPI Asset Management, the latest trade developments intensify fears of economic decoupling, especially affecting Asia's export-reliant economies as new U.S. tariffs loom large. Supply chains, particularly in semiconductor and technology markets, face disruptions, with both the CSI Rare Earth and CSI Semiconductor indices recording losses by the day's end.

(With inputs from agencies.)