Global Market: China stocks fall as global yields, geopolitical tensions weigh on sentiment

Chinese stocks fell on Monday as government efforts to support the market failed to lift investor confidence. Rising global bond yields, geopolitical tensions, and fresh US investigations into technology companies weighed on sentiment, according to a report by Reuters.

The blue-chip CSI300 Index slipped 0.2% in the morning session, struggling near a one-year low, while the Shanghai Composite Index declined 0.1%. In Hong Kong, the Hang Seng Index edged up 0.2%.

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Investor concerns have intensified as the widening conflict in the Middle East pushes oil prices higher, stoking fears of renewed inflation and further increases in global borrowing costs. Rising bond yields have emerged as a key risk for equity markets, while the possibility of a debt crisis among weaker euro zone governments has added to uncertainty, according to the report.

Caitong Securities identified rising global yields as a major source of market anxiety in its outlook, alongside the potential risk of a debt crisis involving financially vulnerable European governments.

Government efforts to stabilise the market have so far produced a muted response. China's top securities regulator, Wu Qing, held a seminar with market participants on Saturday to gather suggestions for improving the country's capital markets.

In another move to support equities, Chinese regulators published draft rules on Friday that would lower the threshold for establishing equity mutual funds, potentially making it easier for new funds to enter the market.

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However, concerns over trade tensions and the outlook for Chinese exports continue to weigh on investor sentiment. Exports have been one of the few bright spots in China's uneven economic recovery, making further trade restrictions a particular concern.

European Trade Commissioner Maros Sefcovic said on Friday that China and the European Union had reached a deal that could reduce Chinese hybrid car exports to the bloc by more than half, highlighting the challenges facing Chinese manufacturers in overseas markets.

Technology stocks were among the biggest drags on Chinese equities on Monday after the United States launched patent infringement investigations into Luxshare Precision Industry and Foxconn Industrial Internet.

Foxconn shares fell as much as 7% to their lowest level in six months, while Luxshare declined 2%, approaching its lowest level since March. The investigations added to concerns over Chinese technology companies' exposure to regulatory and geopolitical risks.

Sector performance was mixed across mainland markets. Consumer electronics, telecommunications and real estate stocks were among the biggest decliners, while banking and consumer shares advanced.

In Hong Kong, banking and biotechnology stocks gained, while chipmakers and artificial intelligence-related shares fell.

The subdued market reaction to Beijing's support measures underscores the challenge facing policymakers as they seek to restore investor confidence amid global financial uncertainty, elevated energy prices and growing trade tensions, the report stated.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)