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• China and Hong Kong stock markets traded lower as weakness in property and AI-linked shares weighed on investor sentiment.
• The CSI 300 Real Estate Index fell 3.9% to a record low, while China Vanke continued to face pressure from its ongoing debt challenges.
• China’s industrial profits recorded their fastest growth since late 2023, but concerns over domestic demand and financing conditions continued to impact markets.
• Semiconductor and AI-related stocks declined despite continued long-term optimism around China’s technology and EV sectors.
• Analysts at CITIC Securities and UBS said investors remain focused on selective growth sectors including AI, infrastructure and chips.
China and Hong Kong equity markets closed lower during volatile trading sessions as continued weakness in property and AI-related stocks offset positive industrial profit data from China. Advertisement
The CSI300 Index declined 0.7% by midday trade, while the Shanghai Composite Index dropped 1.1% to 4099.23 after giving up early gains. In Hong Kong, the Hang Seng Index slipped nearly 1%, while the Hang Seng Tech Index edged 0.2% lower.
Real estate stocks remained under pressure, reflecting continued concerns around China’s property sector recovery. The CSI 300 Real Estate Index fell 3.9% to a fresh record low as investor confidence in developers remained weak. Shares of China Vanke declined 3.5% as the company continued to deal with debt-related stress.
China’s property market has been facing a prolonged slowdown since the liquidity crisis that impacted several major developers over the past few years. Despite multiple policy support measures by Chinese authorities, including easing financing restrictions and support for homebuyers, recovery in the sector has remained uneven.
Technology counters witnessed mixed movement during the session. The ChiNext Price Index rose 0.7% after touching an all-time high earlier in the day. However, gains were limited as semiconductor and AI-linked shares weakened later in trading.
The chip sector index declined 1.9%, while the AI sector index fell 0.4%. Analysts at CITIC Securities said investment opportunities in pure AI companies were already widely recognised and reflected in current market valuations. The brokerage added that growing retail participation in AI-related stocks was creating a divided market environment focused mainly on high-growth technology companies and infrastructure-related sectors.
Meanwhile, UBS APAC equity strategist Karen Hizon said the firm continued to remain overweight on China and Hong Kong equities due to supportive policy measures and attractive valuations in sectors such as AI, semiconductors and electric vehicles.
Economic data released during the week showed that China’s industrial profits in April recorded their fastest growth since November 2023. However, analysts said financial pressure from soft domestic demand and rising component costs continued to impact broader market sentiment. Ongoing geopolitical tensions in the Middle East have also added pressure on manufacturing and supply chains.
Across the region, MSCI’s Asia ex-Japan stock index remained 2.1% higher, indicating relatively stable sentiment in broader Asian markets despite weakness in Chinese and Hong Kong benchmarks.
Source Reuters
5th Jun, 2025
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