China stocks fall as rising geopolitical fears offset strong GDP data

Chinese stocks fell on Wednesday as the widened U.S. chip export ban heightened investor concerns about geopolitical risks, even as the third-quarter economic data came in above expectations.

The broader market mood darkened after a blast at a Gaza hospital dimmed hopes for containing the conflict in the Middle East and complicated U.S. President Joe Biden's already fraught trip to the region.

China's blue-chip CSI 300 Index dropped 0.57%, while the Shanghai Composite Index dipped 0.61%.


Hong Kong's Hang Seng Index and the Hang Seng China Enterprises Index were largely flat.

China's economy grew 4.9% in July-September from the year earlier, beating analysts' forecasts.

Consumption and industrial activity in September also surprised on the upside, suggesting the recent flurry of policy measures is helping to bolster a tentative recovery.

Third-quarter GDP and September activity data, National Day Golden Week tourism revenue, as well as high-frequency trackers jointly point to "more green shoots" in the economy and indicate the sequential growth momentum continues to recover on the back of the ongoing policy easing, albeit at a gradual pace, Goldman Sachs analysts said in a note.

"If this easing continues, full-year 2023 GDP growth could still hit the official 5%. The risk is if Beijing normalises policy pre-maturely, then growth could undershoot the official target as private sector and consumer confidence are still feeble," said Chi Lo, senior market strategist for Asia Pacific at BNP Paribas Asset Management.

Meanwhile, the Biden administration's latest restrictions on more advanced artificial intelligence (AI) chip exports to China weighed on market sentiment.

In China A-shares, 5G communications stocks and AI stocks dropped 2.1% and 1.7%, respectively, leading the decline.

Hong Kong-listed tech firms lost 1.2%.

BYD's shares in Shenzhen jumped 5% as the electric vehicle giant sees its third-quarter net profit to as much as double.