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EQUITIES: Chinese Equities Fall Following US Curbs On Chip Suppliers

EQUITIES
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Chinese equities declined sharply due to concerns over potential additional US curbs on chip supplies to China, undermining recent optimism about the resilience of mainland stocks under trade tensions. While speculation about economic stimulus in December had fueled a surge in the CSI 300 on Wednesday, the possibility of actual restrictions or tariffs is weighing heavily on market sentiment. Investors fear that without new stimulus from Beijing, the market could face further pressure. Additionally, Beijing’s potential stimulus measures remain a key focal point, with urgency growing due to both domestic economic challenges and external threats like US trade policies under a second Trump presidency.

  • The CSI 300 is trading 0.80% lower, consumer discretionary is the worst performing sector, trading 2% lower, led by a 5.5% drop for SAIC Motors, followed by a 3% drop in BYD. SAIC has joined HYD in calling for a 10% price cut from suppliers. Hong Kong listed equities are underperforming mainland equities, with the HSI last down 1.30%, Mainland Property Index trades 1.70% lower, while the HSTech now trades 1.30% lower.
  • Over 161 listed companies in China have secured loans exceeding 37.39b yuan ($5.16b) for share buybacks or stake increases, with maturities typically spanning 12 to 36 months. Notable recipients include Muyuan Foods, Wens Foodstuff, and COSCO Shipping Energy, each obtaining over 1 billion yuan. This initiative aims to stabilize the capital market, boost vitality, and lower corporate financing costs, per China Securities Journal.
  • The Biden administration is preparing to impose new restrictions on semiconductor equipment and AI memory chip sales to China, potentially targeting Huawei suppliers and over 100 Chinese firms involved in chip manufacturing equipment. While the curbs aim to tighten US control over China’s tech ambitions, they exempt allies like Japan and the Netherlands, whose firms could gain a competitive edge over affected American chipmakers. This news pushed Japanese semiconductor names up with the likes of Tokyo Electron up as much as 10%, while Kokusai jumped over 20%.
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Chinese equities declined sharply due to concerns over potential additional US curbs on chip supplies to China, undermining recent optimism about the resilience of mainland stocks under trade tensions. While speculation about economic stimulus in December had fueled a surge in the CSI 300 on Wednesday, the possibility of actual restrictions or tariffs is weighing heavily on market sentiment. Investors fear that without new stimulus from Beijing, the market could face further pressure. Additionally, Beijing’s potential stimulus measures remain a key focal point, with urgency growing due to both domestic economic challenges and external threats like US trade policies under a second Trump presidency.

  • The CSI 300 is trading 0.80% lower, consumer discretionary is the worst performing sector, trading 2% lower, led by a 5.5% drop for SAIC Motors, followed by a 3% drop in BYD. SAIC has joined HYD in calling for a 10% price cut from suppliers. Hong Kong listed equities are underperforming mainland equities, with the HSI last down 1.30%, Mainland Property Index trades 1.70% lower, while the HSTech now trades 1.30% lower.
  • Over 161 listed companies in China have secured loans exceeding 37.39b yuan ($5.16b) for share buybacks or stake increases, with maturities typically spanning 12 to 36 months. Notable recipients include Muyuan Foods, Wens Foodstuff, and COSCO Shipping Energy, each obtaining over 1 billion yuan. This initiative aims to stabilize the capital market, boost vitality, and lower corporate financing costs, per China Securities Journal.
  • The Biden administration is preparing to impose new restrictions on semiconductor equipment and AI memory chip sales to China, potentially targeting Huawei suppliers and over 100 Chinese firms involved in chip manufacturing equipment. While the curbs aim to tighten US control over China’s tech ambitions, they exempt allies like Japan and the Netherlands, whose firms could gain a competitive edge over affected American chipmakers. This news pushed Japanese semiconductor names up with the likes of Tokyo Electron up as much as 10%, while Kokusai jumped over 20%.