China, Hong Kong Markets Dip Amid Earnings Miss and Renewed U.S.-China Tech Tensions

16 May 2025

HONG KONG - Chinese and Hong Kong stocks closed lower on Friday, weighed down by disappointing earnings from Alibaba and rising concerns over U.S.-China tech restrictions.

In mainland China, the Shanghai Composite Index slipped 0.4%, while the CSI300 tracking the country’s top blue-chip stocks—fell 0.46%. Liquor and insurance companies led the decline, each shedding around 1.4%.

Hong Kong's Hang Seng Index also edged down 0.46%, with e-commerce giant Alibaba tumbling more than 4% after reporting quarterly revenue that fell short of analysts’ expectations. Tech stocks took a hit overall, with the Hang Seng Tech Index down 0.3%, although NetEase helped offset losses with a 13% surge on stronger-than-expected earnings.

Adding to investor caution, reports surfaced that the U.S. Commerce Department is considering adding more Chinese tech firms, including semiconductor maker ChangXin Memory Technologies (CXMT), to its restricted export list. Subsidiaries of SMIC (Semiconductor Manufacturing International Corporation) and Yangtze Memory Technologies are also under review, according to sources.

"The market is now focused on U.S.-China competition beyond tariffs—especially in sectors like semiconductors and healthcare," noted Dickie Wong, Executive Director of Research at Kingston Securities.

Despite the day's declines, the Hang Seng Index still managed to notch its fifth consecutive weekly gain, offering some optimism. Analysts at Morgan Stanley pointed out that while the recent easing of tariffs between the U.S. and China has been a welcome surprise, the broader relationship remains fragile, keeping market sentiment cautious. Trading volumes on the mainland reflected that, staying subdued through the week.

Elsewhere, Shenzhen’s index inched up 0.18%, while the start-up heavy ChiNext Composite slipped slightly by 0.186%.