Market Jitters: Middle East Unrest and AI Developments Shake China, Hong Kong Stocks

On Friday, China and Hong Kong stock markets faced declines due to escalating tensions in the Middle East, which weighed on investor sentiment. Notably, telecommunications, cloud computing, and defense sectors led the downturn in China.

The situation was compounded by a White House accusation that China engaged in extensive intellectual property theft from U.S. AI labs, overshadowing a forthcoming summit between U.S. and Chinese leaders. Meanwhile, semiconductor stocks were buoyed by DeepSeek's release of its new AI model.

The CSI Semiconductor Industry Index rose 1.6%, alongside significant increases in Huahong Semiconductor and SMIC shares. While some tech-focused indices showed gains, broader sentiments remained cautious, particularly with ongoing concerns about Middle East stability impacting confidence.