HK stocks inch up amid US fiscal fears
HK stocks inch up amid US fiscal fears
The Hang Seng Index rose 13.07 points, or 0.06 percent, to 23,557.30 in opening trades for the day. File photo: RTHK
Asian shares made tentative gains on Friday as beaten-down Treasuries found buyers after US President Donald Trump's tax bill narrowly passed the lower house, although debt worries still lingered.
In Hong Kong, the benchmark Hang Seng Index had a flat opening, rising a mere 13.07 points, or 0.06 percent, to 23,557.38.
Across the border, the benchmark Shanghai Composite Index was down 0.1 percent to open at 3,376.87.
The Shenzhen Component Index opened 0.09 percent lower at 10,210.62.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, was down 0.12 percent to open at 2,043.2.
Australian shares edged higher, as gains in energy and bank stocks offset losses in miners and gold, with investors closing out a week shaped by the Reserve Bank of Australia's second interest rate cut in more than four years.
Overnight, purchasing managers' index data around the globe showed US business activity picked up pace in May, which helped Wall Street rise earlier yesterday before running into selling pressures and closing the day largely flat.
In contrast, disappointingly weak activity in Europe dragged shares there lower.
Nasdaq futures and S&P 500 futures both were flat.
The Republican-controlled US House voted by a slim margin to pass Trump's tax cut bill, which would fulfil many of his campaign pledges, but will increase the US$36.2 trillion US debt pile by US$3.8 trillion over the next decade.
Treasury yields, especially at the longer-dated end, have climbed on worries about US fiscal health in the run-up to the passage of the bill. That was exacerbated by the decision from Moody's last week to downgrade the US credit rating, citing rising debt.
In Asia, yields on super-long Japanese government bonds held near all-time highs on Friday.
The 30-year yields have jumped 23 basis points this week and were last at 3.175 per cent, which is being monitored closely by the Bank of Japan.
The MSCI's broadest index of Asia-Pacific shares outside Japan inched up 0.1 per cent on Friday but for the week it is still set for a loss of 0.4 per cent after five weeks of gains. (Reuters/Xinhua)
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In Q1 of 2025, Empyrean and Primarius' sales were up 10% and 12% year-on-year, respectively. While the share prices of US EDA companies fell, those of their Chinese competitors rose. The share prices of Empyrean Technology and Primarius Technologies jumped 16% and 21%, respectively, last Wednesday and Thursday. Primarius, which has a significantly smaller market capitalization, continued to rise, finishing up 35% in the week through Tuesday, June 3. Chinese EDA companies receive support from central and local governments, academia and private sector customers, including tech giants Huawei and SMIC. China's National Center of Technology Innovation for EDA was established in Nanjing in June 2023, with contributions from Jiangsu Province, the Ministry of Education, Peking and Xidian universities, and an investment company from Shenzhen. Member companies include Empyrean, Primarius and Shenzhen Giga Design Automation. 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China accounted for about 10% of Nvidia's sales in Q1, down from 13% the previous fiscal year. Now, the figure seems likely to drop to low single digits. Nvidia's share of the Chinese market for AI processors, which has already dropped from 95% to 50% (40% by some estimates), is also expected to keep falling, likely to insignificance if US policy doesn't change. At the Computex 2025 event held in Taipei, Taiwan, from May 20 to 23, Nvidia CEO Jensen Huang called export controls a 'failure.' Elaborating on the assessment, he said that, 'The US has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it's clearly wrong.' A Nvidia spokesperson added, 'With the ban on H20, our competitors in China are now largely shielded from US competition and free to leverage that entire $50 billion market to build a robust AI ecosystem.' In an interview with the Stratechery tech newsletter published on May 19, Huang said, 'China's doing fantastic. 50% of the world's AI researchers are Chinese and you're not going to hold them back, you're not going to stop them from advancing AI. Let's face it, DeepSeek is deeply excellent work. To give them anything short of that is a lack of confidence, so deep that I just can't even tolerate it.' Alibaba, Baidu, Tencent and other Chinese buyers of AI processors are already using domestic alternatives to chips from Nvidia and AMD, starting with, but not limited to, Huawei's Ascend series. On May 28, The New York Times reported that the US government has restricted sales of jet engine technology to China, which will likely be a major headache for the Commercial Aircraft Corporation of China (COMAC). COMAC's C919 passenger jets are currently equipped with LEAP turbofan engines manufactured by CFM International, a joint venture between GE Aviation of the US and Safran Aircraft Engines of France. However, the Aero Engine Corporation of China appears to be making progress toward developing a domestic alternative, known as the CJ-1000. In March, as reported by the South China Morning Post, Shi Jianzhong, honorary president of the Shanghai Society of Aeronautics and former deputy general manager of COMAC, told a Chinese aviation forum that 'The CJ-1000 engine is in trial runs and it fared better than my most optimistic expectations.' Verification flights of the C919 aircraft equipped with the CJ-1000 jet engine are expected to begin 'soon.' There is also the possibility of renewed collaboration with Russia, which has a history of building jet engines for commercial aircraft dating back to the Soviet Union era. But that appears to be on hold as Russia concentrates on developing key components for its own short- and medium-range passenger jets. Two years ago, Yury Slyusar, CEO of Russia's United Aircraft Corporation (UAC), warned COMAC that 'There may come a point when Western nations halt the supply of crucial components, assemblies, and products, potentially leading to a halt in aircraft production. Therefore, we urge them to reconsider the 'insides' of the aircraft as part of joint projects and reduce dependency on Western companies.' Ever since Trump first slapped sanctions on Huawei in 2018, the US government has incentivized Chinese innovation while undermining once-dominant American market shares, creating what it aims to prevent – the emergence of Chinese technology industries that are both self-sufficient and globally competitive. The attempt to suppress Huawei – which today is not only a world leader in telecom equipment but also has a growing presence in AI, IC design, autonomous driving and even enterprise software – has, by any measure, failed. And that will likely be the case for many Chinese companies targeted by the latest round of US sanctions. At the Reagan National Economic Forum held in California at the end of May, JP Morgan Chase CEO Jamie Dimon said, 'I would engage with China. I just got back from China last week. They're not scared, folks. This notion they're going to come bow to America, I wouldn't count on that. When they have a problem, they put 100,000 engineers on it. They've been preparing for this for years.' Follow this writer on X: @ScottFo83517667
