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China and Hong Kong stock markets ended mostly flat as gains in defensive sectors such as banking, energy, and insurance balanced out losses in the property and AI segments. Developer China Vanke's move to delay an onshore bond repayment sent its shares tumbling to levels not seen since 2008, dragging down the broader real estate index. Meanwhile, regulatory restrictions on ByteDance affected AI-related stocks, and industrial profits in China fell after two months of growth, reflecting ongoing weak domestic demand and a slowdown in exports. Consumer-focused stocks like Pop Mart gained on government incentives.
China and Hong Kong shares showed little overall movement, with defensive sectors including banks, energy, and insurance helping offset declines in property and technology stocks. At the close, the Shanghai Composite index rose 0.3% to 3875.26 points, while the blue-chip CSI300 edged down 0.1%. The CSI Energy Index gained 1%, the CSI Banks Index increased 0.5%, and the insurance sector added 0.3%, supporting overall market stability. Advertisement
The property sector faced significant pressure after China Vanke announced its intention to delay an onshore bond repayment for the first time. This triggered a sharp selloff, with Vanke shares dropping as much as 8.8% to their lowest level since 2008. The broader CSI 300 real estate index also fell, slipping up to 4.5% at one point before settling down 2.4%, marking a continued weakness in the sector.
In the technology space, the AI sector lost earlier gains following reports that Chinese regulators had restricted ByteDance from deploying Nvidia chips in new data centers, creating caution among investors. Analysts at Yingda Securities noted that market volatility is likely to continue as the year-end approaches, with investors awaiting more supportive measures before committing to new positions.
In Hong Kong, the Hang Seng Index edged up 0.1%, while the Hang Seng Mainland Property Index declined 0.7%, after dropping as much as 2% earlier. Consumer-focused companies saw some optimism, with toy maker Pop Mart rising 6.8% to a two-week high following Beijing's announcement of new policies aimed at boosting consumption and promoting upgrades in sectors like pets and toys.
On the economic data front, China's industrial profits fell in October after two months of growth. Companies are still facing challenges from weak domestic demand and declining exports, highlighting persistent pressures in the manufacturing and industrial sectors.
Source Reuters
5th Jun, 2025
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