Markets seesaw amid Middle East uncertainty

Research evidence excerpt

Markets seesaw amid Middle East uncertainty

the Middle East and higher crude oil prices weighed on sentiment,

investor confidence was supported by a 1.8ppt MoM increase in the private-

sector issued services PMI for May. Coal mining, power generation, and CPO-

related stocks led gains, and the Shanghai Composite Index inched higher,

rising for a second consecutive day. On the Hong Kong market, however,

investors reacted negatively to rising crude oil prices, leading to higher selling

pressure in high-tech stocks. The Hang Seng Tech Index fell 2.7% DoD and

the Hang Seng Index declined 1.6%, reversing part of the previous day’s gains.

Afterward, risk-off selling continued to spread on the back of escalating military

tensions in the Middle East. On Thursday 4 June on the mainland markets,

declines in non-ferrous metal prices resulted in selling of related stocks, and

the Shanghai Composite Index retreated 0.6% DoD. In Hong Kong, equities

extended losses with the Hang Seng Tech Index down 1.6% and the Hang

Seng Index down 1.5% amid concerns over rising US interest rates.

State-backed fund’s semiconductor stock sales dampen investor

sentiment

The selling of semiconductor stock holdings by the National Integrated Circuit

Industry Investment Fund, one of China’s state-backed funds (hereafter “the

state-backed fund”), appears to be weighing on investor sentiment. Amid

strong momentum for semiconductor stocks listed in the mainland Chinese

and Hong Kong markets, mainland-listed firms NSIG and Darbond Technology

released large shareholding reports on 28 May showing that the state-backed

fund had lowered its stake in both stocks, while information disclosed by the

Hong Kong Stock Exchange revealed that the state-backed fund also reduced

its stake in SMIC.