China, Hong Kong stocks fall as Israeli strikes on Iran weigh on risk assets
SHANGHAI: Mainland China and Hong Kong stocks slipped on Friday, mirroring losses across regional markets, as investors rushed toward safe-haven assets in response to Israeli strikes on Iran that escalated tensions in the Middle East.
Israel said it targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon.
At the midday break, the Shanghai Composite index was down 0.72 per cent at 3,378.01 points, while the blue-chip CSI300 index was down 0.76 per cent at 3,862.75 points.
The smaller Shenzhen index dropped 1.27 per cent, the start-up board ChiNext Composite index was weaker by 1.14 per cent and Shanghai's tech-focused STAR50 index dropped nearly 1 per cent.
In Hong Kong, the benchmark Hang Seng Index was down 0.7 per cent at 23,866.86 points, while the Chinese H-share index, the Hang Seng China Enterprises Index fell 0.89 per cent to 8,651.84 points.
However, the risk-off sentiment lifted gold and miners shares, with key performers including Western Region Gold Co , Shandong Gold Mining Co Zhongjin Gold Corp all gaining more than 2 per cent in morning trades.
Another outperformer was oil and gas shares, with a sub-index jumping 2.05 per cent by midday.
Safe-haven demand for the US dollar also pressured the yuan, with the onshore spot price weakening 0.13 per cent to 7.1807 per dollar around midday.
Major Chinese stock indexes appeared poised for a weekly decline, despite the recent trade truce between Washington and Beijing easing the risk of further tariff escalation in the near term.
"While geopolitical tensions (between the United States and China) may have temporarily de-escalated, China's macroeconomic outlook remains fragile," BCA Research said in a note.
As a result, without a decisive policy boost, Chinese equities lack any catalyst to trend higher."
The SSEC is set to fall 0.22 per cent for the week, while the CSI300 index is due to lose 0.29 per cent.
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