China stocks slump to half-year lows as COVID, US crackdown weigh

SHANGHAI, Oct 10 (Reuters) – China stocks tumbled to half-year lows on Monday, dragged by semiconductor giants and consumer firms, as trade resumed after a week-long holiday with the market being dominated by concerns over the latest US crackdown on the chip-making industry, weak economic data and fresh COVID-19 cases.

** The blue-chip CSI 300 Index slumped 2.2% to the lowest level since April 3, and the Shanghai Composite Index lost 1.7% to trade below the key 3,000 points psychological line.

** The Hang Seng Index declined 3%, while the Hang Seng China Enterprises Index plunged 3.2%.

** Global stocks skidded lower after a surprise drop in US unemployment quashed any thought of a pivot on policy tightening ahead of an inflation reading, which is expected to see core prices move higher again.

** China’s domestic COVID-19 situation worsened over the National Day Golden Week, during which holiday tourist trips also went down 18.2% from last year as strict anti-virus rules discouraged movement.

** Consumer staples and tourism companies tumbled 2.8% each, while media shares shed 2.1%, as box office sales plunged over the holiday.

** Furthermore, a private-sector business survey showed on Saturday that China’s services activity in September contracted for the first time in four months.

** An index measuring China’s semiconductor firms tumbled 7.1%, and Shanghai’s tech-focused board STAR Market declined 4.5%.

** The Joe Biden administration published a sweeping set of export controls on Friday, including a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment, to slow Beijing’s technological and military advances.

** However, Chinese real estate developers rose 1% following the country’s latest measures to prop up the distressed property sector.

** Beijing is ramping up efforts to boost home sales by easing mortgage rate floors, cutting interest rate on provident fund loans and offering individual income tax rebates for home buyers.

** Premier Li Keqiang said China will strive to consolidate its economic recovery as the country’s development faces difficulties and challenges.

** Energy suppliers also jumped 1.9%, as Chinese industry players catched up with global peers’ gains made over the holiday.

** Tech firms listed in Hong Kong tumbled 4%, with food-delivery giant Meituan down 6.7%.

** “Overall valuation in China’s stock market is attractive from a long-term perspective,” said analysts at China Asset Management Co. “Key indexes are bottoming, while a turning point will depend on domestic and overseas policies.”

** They added that once the US inflation data peaked, the Wall Street will likely see a rebound, which can help improve global risk appetite.

(Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips)