China stocks drop on heightened trade tensions, automakers' price war
Updates to market close
By Summer Zhen
HONG KONG, Nov 28 (Reuters) -China and Hong Kong stocks fell on Thursday, as investors feared an escalation of the trade war with the U.S. and a further ban on chip sales to China, while a price war between automakers in the country looked set to intensify.
**The blue-chip CSI 300 index .CSI300 closed down 0.88%, while the Shanghai Composite index .SSEC slid 0.43% at 3,295.70.
** Most sectors closed lower as investors were largely in a wait-and-see mode for clarity on U.S. President-elect Donald Trump's trade policies and its potential consequences.
** Auto stocks .CSI931008 were the biggest decliners, falling by more than 2%, after media reports said that BYD and other automakers pushed suppliers to cut prices, signalling that a brutal price war in the world's largest auto market is set to escalate.
** BYD's Hong Kong 1211.HK and mainland shares 002594.SZ fell 2.6% and 2.3% respectively, while SAIC Motor Corp 600104.SS declined by 2.8%.
** In Hong Kong, the Hang Seng Index .HSI was down 236.17 points or 1.2% at 19,366.96. The Hang Seng China Enterprises index .HSCE fell 1.46%, while the Hang Seng Tech .HSTECH lost 1.52%.
** China's state media warned Trump his pledge to slap additional tariffs on Chinese goods could drag the world's top two economies into a mutually destructive tariff war.
** "A key risk for China's economy and markets in 2025 comes from Trump's policies-the proposed tariffs of 60% could reduce GDP growth by up to 2% over the next four to six quarters," Michelle Qi, head of China equities at Eastspring Investments, said in a note.
** Sentiment was further dented after Bloomberg News reported that the Biden administration could announce additional curbs on sales of semiconductor equipment and artificial intelligence memory chips to China as soon as next week. nFWN3MY1HQ
** That also weighed on the broader consumer stocks listed both onshore and offshore .CSI000912, .HSCGSI.
** The smaller Shenzhen index .SZSC ended down 0.65% and the start-up board ChiNext Composite index .CNT was weaker by 1.77%.
** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was weaker by 0.52%, while Japan's Nikkei index .N225 closed up 0.56%.
Reporting by Summer Zhen; Editing by Abinaya Vijayaraghavan and Varun H K
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