China stocks snap three-day slide on chip optimism

HONG KONG - China stocks edged higher on Friday, snapping a three-day losing streak, on renewed optimism surrounding domestic chipmakers, although major indexes remained on course for a weekly decline.

** By the midday break, the Shanghai Composite Index .SSEC was up about 0.1% at 3,878.98, after spending much of the morning under pressure.

** The modest advance put the benchmark index on track for its first daily gain after three consecutive declines, but it remained 0.3% lower for the week amid a lack of fresh catalysts ahead of a key policy meeting.

** The blue-chip CSI 300 Index .CSI300 edged 0.1% higher and has gained 0.6% so far this week.

** The spotlight on Friday was on Moore Threads Technology Co 688795.SS, often called "China's Nvidia", which surged roughly fivefold in its trading debut, reflecting expectations that the U.S.-sanctioned firm will gain from Beijing's push to strengthen domestic chip production.

** Its explosive debut followed news that a bipartisan group of U.S. senators introduced a bill on Thursday aiming to prevent the Trump administration from easing restrictions on China's access to advanced AI chips from Nvidia NVDA.O and AMD AMD.O for the next 2.5 years.

** China's tech breakthroughs, as well as "national pride" amid U.S.-China geopolitical tensions, are set to continue being a main pillar for the slow bull market for the next 6-12 months, according to Patrick Pan, China equity strategist at Daiwa Capital Markets in Hong Kong.

** "From a longer-term perspective, we believe the recent pullback of China equities should have freed up more upside for the next year," he said in a note.

** The property sub-index extended its slide, with the CSI 300 Real Estate Index .CSI000952 down more than 2%.

** China's home prices are forecast to decline 3.7% this year, and likely to fall through 2026 before stabilising in 2027, according to the latest Reuters survey.

** In Hong Kong, the benchmark Hang Seng Index .HSI slipped 0.2%, but was still on track to post a weekly gain. The tech index .HSTECH also lost 0.2%.

Jiaxing Li/Reuters