Geopolitical Tensions Shake Chinese Stock Markets

Chinese stocks took a hit on Friday, retreating from a 10-year high as geopolitical tensions subdued investor risk appetite. China's CSI300 Index fell by 1.3%, and the Shanghai Composite Index dropped 0.5% after reaching its highest point since 2015.

In Hong Kong, the Hang Seng Index endured its longest losing streak since March, slipping 1.1% for a fifth consecutive decline. This downturn came in the wake of China's expanded export controls on rare earths, responding to U.S. legislative calls for broader restriction on chipmaking exports to China.

Economic sectors, including semiconductors and electric vehicles, also felt the pressure. Profit-taking further challenged the CSI Semiconductor Index, which fell 4.1%, while issues in the electric vehicle sector dragged the New Energy Vehicles Index down by 5.2%. With China set to release new trade data, analysts suggest a shift in market sentiment towards profit-driven dynamics.