China stocks head for weekly loss as AI rally loses steam

China stocks rose on Friday but were on track to end the week lower, as a rally in AI shares lost momentum and concerns over higher U.S. yields weighed on global equities.

China's blue-chip CSI300 Index and the Shanghai Composite Index were both ‌up 0.4% ⁠by the ⁠lunch break. Hong Kong benchmark Hang Seng rose 2.1%.

For the ​week, the CSI300 Index was set to close nearly 1% down, while ​the Hang Seng Index was up 0.6%.


Consumer staples shares rose 2.6%, leading gains onshore, as sentiment towards AI ​supply chain stocks cooled and investors shifted ⁠into traditional ‌sectors, according to market participants. Chinese liquor giant ​Kweichow Moutai shares ​rose 2.4%.

The tech-focused STAR50 Index fell ⁠0.7%, and was down nearly 4% this week. ​The CSI Artificial Intelligence Index edged down 0.2%.

Onshore A-share sentiment remained soft this week amid higher U.S. yield concerns and weak domestic macro data, Morgan Stanley analysts said in a note. They lowered their China equity index targets to reflect a weaker growth outlook, tighter liquidity, less ‌favourable flow dynamics and rising regulatory uncertainty.

Hong Kong shares rose after Federal Reserve Governor Christopher Waller ​said he ​is leaning ⁠toward keeping interest rates steady at the U.S. central bank's policy meeting this month if the next batch of inflation data shows ​price pressures are continuing to moderate.

Tech majors listed in Hong Kong rebounded from a two-month low, up 2.5%. Alibaba shares gained 3.4%.

Shares of Chinese smartphones-to-electric vehicles (EV) maker Xiaomi climbed 3.1% on a deal with German auto dealers.