Tech shares drag China stocks lower as US yields rise

Business Recorder reported that Chinese shares fell on Thursday as investors back from a week-long holiday weighed renewed Sino-US tensions, firmer global yields and an approaching earnings season. The tech-focused STAR 50 Index slid nearly 4%, while the large-cap CSI300 lost 0.4% in morning trade and the Shanghai Composite eased 0.3%.

The CSI300 is hovering near a one-year low, roughly 15% below its June peak, and Hong Kong's Hang Seng fell another 2%. A partner at Shanghai Zhuozhu Investment, Wang Zhuo, said early-year enthusiasm for chipmakers and other hard tech names pushed valuations to irrationally high levels, and the STAR 50 still trades at roughly 100 times earnings even after losing more than a third of its value since July 1.

Further pressure came from a US Federal Communications Commission plan to vote on October 29 to block Chinese laboratories from evaluating electronic equipment destined for US use. Traders are also watching Sino-EU trade talks this month, after reports that Beijing turned down a European Union appeal for self-imposed restraints on hybrid vehicle exports. China Securities said a sharp rise in 30-year US Treasury yields would keep weighing on Chinese equities, even as odds of another US rate increase this month eased. Technology names were the weakest on Thursday, whereas energy, property and lenders posted gains.