China stocks slumped on Friday, logging the biggest daily decline since last November's
rally driven by optimism over easing of COVID restrictions, as uneven Chinese economic recovery dented investor sentiment.
Shares of artificial intelligence (AI) and tech companies led Friday's decline, after frenzy around Chinese equivalents of OpenAI's ChatGPT chatbot fuelled speculative bets and boosted shares in recent months.
** China's blue-chip CSI300 Index and the Shanghai
Composite Index both closed down 2%, while Hong Kong's
benchmark Hang Seng Index finished 1.6% lower.
** For the week, the CSI300 Index declined 1.5%, while the
Hang Seng Index lost 1.8%, both finishing the week at their
lowest levels in April.
** Shares in both artificial intelligence , and
semiconductors slumped more than 6% to lead the
decline, and media firms tumbled 4.6%.
** UBS wrote in a note that valuation in China technology,
media, and telecom (TMT) stocks is at extreme levels and first
quarter results did not show fundamental support.
** Meanwhile, broad sentiment remained subdued as market
participants closely monitored the progress of China's economic
recovery.
** "Investor sentiment edged down as debate over the
sustainability of fundamental recovery continues despite the
strong macro data," said Morgan Stanley analysts, suggesting
investors to watch May Golden Week data.
** Despite raising full-year China growth forecast to 5.9% from 5.3%, Nomura's chief China economist Ting Lu said in a note that they remain cautious on the second half of 2023 and 2024, when the sweet spot of post-pandemic pent-up consumption demand will be over.
** China's first-quarter economic data published on Tuesday
showed the recovery is uneven. Factory output growth was below
expectations, and property investment remained weak.
** Still, the benchmark index is up nearly 15%
since last November.
** In Hong Kong, tech shares fell 3.1%, tracking
Wall Street's losses as earnings disappointment as well as
looming U.S. debt ceiling fight started to worry investors.
** Meanwhile, U.S. Treasury Secretary Janet Yellen said on
Thursday the country seeks "constructive and fair" economic ties
with China, but will protect its national security interests and
push back against Chinese actions to dominate foreign
competitors.
(Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu and
Eileen Soreng)
