China, HK stocks end lower as investors turn cautious on geopolitical risks

China and Hong Kong equities closed down on Monday, as investors turned cautious on heightened tensions between Beijing and Tokyo over the weekend and opted to book profits following a recent rally.

** China’s blue-chip CSI300 Index 3399300 ended 0.7% lower, while the Shanghai Composite Index 000001 lost 0.5%. Hong Kong’s benchmark Hang Seng Index HSI slipped 0.7%.

** So far this year, the Hang Seng Index has gained 30% and the CSI300 has climbed 17%.

** The row erupted after Japan’s Prime Minister Sanae Takaichi told Japanese lawmakers that a Chinese attack on Taiwan could threaten Japan’s survival and potentially trigger a military response, something officials had long avoided airing in public for fear of provoking Beijing, which claims the self-ruled island.

** A senior Japanese diplomat will head to China on Monday, according to Japanese media, as Tokyo tries to calm an escalating diplomatic spat. Meanwhile, China’s foreign ministry said Premier Li Qiang has no plans to meet Takaichi on the sidelines of the upcoming G20 summit in South Africa.

** Shares of Chinese software maker Linkage 688588, which derives most of its sales from Japan, fell as much as 4% to their lowest level since July 24. Chinese online tourism giant Trip.com 9961 slipped 3.5%.

** Bucking the sombre mood, onshore artificial intelligence firms 9930713 jumped 1%, after media reported Huaweiwould unveil new AI technology on November 21.

** China stocks have been range-bound this month after key benchmarks rose nearly 20% this year.

** “We view 2026 as a year of stabilisation after 2025’s high returns, Morgan Stanley said.

** “Index upside is modest with moderate EPS growth and valuation settling at a higher regime, as China reclaims its footing in the global tech race and trade tension abates,” Morgan Stanley said.

** The CSI Defense Index 3399973 was up 1.1%.

** Tech majors traded in Hong Kong HHSTECH were down 1%.