China, Hong Kong stocks fall after flare-up in Middle East tensions

Tencent Holdings

04/06/2026 05:19

    SHANGHAI, June 4 (Reuters) - China and Hong Kong stocks fell with Asian markets on Thursday, as Middle East tensions flared, but Chinese chipmakers jumped on bets of domestic breakthroughs.
** In China, the large-cap CSI300 Index .CSI300 fell 0.6% by the lunch break, while the Shanghai Composite Index .SSEC lost 0.4%.
** Hong Kong's Hang Seng Index .HSI declined 1.4%.
** Israel and Lebanon agreed to implement a ceasefire to end hostilities, boosting hopes for a broader deal to end the U.S.-Israeli war on Iran. 
** However, hostility continued to simmer in the region, with Tehran striking Kuwait, damaging its airport and injuring dozens, and the U.S. military carrying out strikes near the Strait of Hormuz.
** The uncertainty drove investors into risk-off mode, with Asian markets .MIAPJ0000PUS falling 1.5%, following overnight weakness on Wall Street.
** Chinese chipmakers stood out amid hopes domestic players will sidestep Washington's sanctions and export controls. 
** The optimism was fed by news that DeepSeek, China's best-known AI startup, is set to raise about 50 billion yuan ($7.4 billion) in its first funding round from investors including Tencent Holdings 0700.HK and CATL 300750.SZ. 
** Earlier this month, China's AI champion Huawei said it can make industry-leading semiconductors within five years.
** "The hopes for China's AI expansion are increasingly pinned to progress in domestic chipmaking," said Tilly Zhang, analyst at Gavekal Dragonomics.
** The STAR Semiconductor Material & Equipment Index .CSI950125 jumped 4%. The CSI Semiconductor Industry Index .CSI931865 gained 2.5%.
** Meanwhile, China coal stocks .CSI399998 rose sharply on bets that coal miners will benefit from a prolonged oil shock. 
** Most sectors fell, with metal .CSISNMIM and materials stocks .CSI000909 leading the declines. 

(Reporting by Shanghai Newsroom; Editing by Harikrishnan Nair)
((samuel.shen@tr.com))