Chinese shares fell following a week-long break as inflation-induced weakness in Asia’s technology sector added to pressure from sluggish holiday spending.
The onshore benchmark CSI 300 Index ended 1.1% down Thursday, reversing earlier gains upon its return from the Golden Week public holiday that began on Oct. 1. The chip-heavy STAR 50 Index lost 4.8%.
Selling intensified in afternoon trading as rising oil prices and global bond yields deepened worries about energy costs and elevated borrowing costs, factors that threaten tech firms’ earnings and an increasingly debt-laden AI industry. That further soured already fragile investor mood after an initial set of data underscored entrenched pessimism among Chinese consumers.
With the market failing to sustain earlier gains, “the hesitation reflects a bigger issue: investors know Beijing can deliver more stimulus, but they are less convinced it will translate into a sustained economic recovery,” said Charu Chanana, chief investment strategist at Saxo Markets.
The accelerated tech-led declines in the last two hours of Thursday’s trading was part of an Asia-wide selloff resulting from worries that persistently high oil prices may keep monetary conditions restrictive in many economies.
Further weighing on China’s tech firms was a slump in optical-communication stocks on concerns about potential US restrictions.
Also darkening the mood were early data that pointed to muted travel and softer spending per person, as well as lukewarm city entertainment during the holiday period, including a sharp drop in box-office sales.
The tepid consumption picture came after policymakers unveiled a slew of targeted measures aimed at keeping economic growth on track rather than delivering a broad revival in late September. The support package, including mortgage subsidies and expanded lending to select industries, left investors unimpressed and waiting for more aid to address underlying demand weakness.
Investors are now shifting their attention to the Communist Party’s fifth plenum scheduled Oct. 26-29, a crucial gathering that may lead to greater efforts to rejuvenate growth. In an article published on Oct. 1, Finance Minister Lan Foan said China is mulling additional fiscal policies to reach its growth target for 2026.
“Beijing’s additional policy tweaks are by no means certain, but they are logical choices for the country that needs to at least lean against the persistent softness in domestic demand and keep the favorable capital market environment for businesses leading the country’s tech catch-up in strategic industries,” said Homin Lee, senior macro strategist at Lombard Odier Singapore.
Hardware tech stocks were among the biggest losers in China’s onshore market, with optical names such as Suzhou TFC Optical Communication Co. tumbling nearly 10% and chipmakers like Semiconductor Manufacturing International Corp. also posting hefty losses.
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