China stocks retreat from 13-year high on Sino-US tensions; Hong Kong up

China stocks retreat from 13-year high on Sino-US tensions; Hong Kong up

SHANGHAI: China stocks retreated from a 13-year high on Friday, as investors booked profits following a strong rally amid worries over Sino-US tensions.

The CSI300 index fell 1.0 per cent, to 5,458.06 points at the end of the morning session, while the Shanghai Composite Index lost 0.6 per cent, to 3,553.96 points.

Trump administration officials are expected to discuss a proposed expansion of an executive order banning US investment in alleged Chinese military companies at a Thursday afternoon meeting.

The US ambassador to the United Nations, Kelly Craft, will visit Taiwan on Jan. 13-15 for meetings with senior Taiwanese officials, the US mission to the U.N. said on Thursday, prompting China to warn they were playing with fire.

Leading the decline on Friday, the CSI300 consumer staples index and the CSI300 materials index dropped 2.6 per cent and 1.9 per cent. Including session’s losses, both indexes are still up 8.2 per cent and 12 per cent this year, respectively.

The CSI new energy index, tracking China’s high-flying new energy sector, retreated 3.2 per cent. The index has gained 8 per cent this year following a 105 per cent rise in 2020 thanks in part to China’s carbon neutrality pledge.

“There are signs of crowded trade in some hot sectors for now as investors expect more fund inflows via mutual funds,” said Jin Jing, an analyst with Caitong Securities.

Jin also noted the weakness in small-cap stocks since China published new delisting rules.

In late last year, China’s exchanges published new rules for simplifying the delisting process for public companies.

In Hong Kong, the Hang Seng index added 1.3 per cent, to 27,899.47 points, while the Hong Kong China Enterprises Index gained 1.7 per cent, to 10,980.60.

Bucking the broad gains, the Hang Seng telecommunications index tumbled 4.9 per cent, after global index providers MSCI Inc and FTSE Russell said they would cut three Chinese telecom companies from their benchmarks in response to a US investment ban.

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