HONG KONG: China stocks weakened on Wednesday, while Hong Kong stocks were flat as slower services sector growth and escalating trade frictions with the US dampened investor sentiment.

Chinese stocks shrug off latest US chip crackdown

• At the midday break, the Shanghai Composite index was down 0.07% at 3,376.41 points.

• China’s blue-chip CSI300 index was down 0.21%, with the consumer staples sector falling 0.58% and the real estate index slipping 1.38%.

• In Hong Kong, the Hang Seng Index was up 0.08% at 19,762.80.

• China’s services activity expanded at a slower pace in November, with the Caixin/S&P Global services purchasing managers’ index (PMI), falling to 51.5 from 52.0 in October, as the economy braces for a rocky ride of more US tariffs under a second Trump administration.

• Sentiment was also jittery following’s Beijing export ban to the United States of critical minerals that have widespread military applications, which escalated trade tensions the day after Washington’s latest crackdown on China’s chip sector.

• “This new salvo intensifies fears of economic decoupling, as the looming US tariff barrage hangs over Asia’s export-driven economies,” said Stephen Innes, managing director at SPI Asset Management.

• The repercussions of these tit-for-tat measures could significantly disrupt supply chains, with the semiconductor and technology sectors squarely in the crosshairs, he added.

• Rare earth and chip sectors gained as investors continued to wager on domestic alternatives. The CSI Rare Earth Industry Index edged up 0.1% by noon trading break after opening 0.9% higher, and the CSI Semiconductor Industry Index added 1%.