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Consumer, financials drag on China shares as tech rout hits Hong Kong

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SHANGHAI — China shares slipped on Thursday as gloomy economic prospects weighed, while Hong Kong’s benchmark index tracked a steep Wall Street selloff after index heavyweight Tencent reported disappointing results.

** At midday, China’s blue-chip CSI300 index was down 0.25% at 3,981.75 points, narrowing earlier losses. The Shanghai Composite index slipped 0.08% to 3,083.39 points.

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** The CSI300 financial sector sub-index fell 0.34%, the consumer staples sector dropped 1.15%, and the healthcare sub-index lost 0.77%.

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** Consumer firms have been hit by a darkening economic outlook caused in part by strict zero-COVID rules, casting doubt over how much the country will contribute to future global trade and investment.

** Chinese H-shares listed in Hong Kong fell 2.28% to 6,927.44, while the Hang Seng Index was down 2.25% at 20,179.30.

** Tech firms led losses in Hong Kong, with the Hang Seng Tech index down 3.4% at midday, with Tencent Holdings dropping 6.62%.

** Tencent, which been battered by a regulatory crackdown on large internet firms, said on Wednesday that its quarterly profit halved from a year ago and revenues stagnated.

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** The smaller Shenzhen index was flat, the start-up board ChiNext Composite index was 0.12% weaker and Shanghai’s tech-focused STAR50 index was up 1.51%​.

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** Offering some hope for investors, authorities in Shanghai on Thursday announced more plans for exiting lockdowns.

** Relaxing COVID restrictions are a potential catalyst for foreign interest in A-shares, said Andy Maynard, head of equities at China Renaissance in Hong Kong.

** “What else could be bad that isn’t already priced into this market?” he said.

** So far this year, the Shanghai stock index is down 15.3%​ and the CSI300 has fallen 19.4%, while China’s H-share index listed in Hong Kong is down 15.9%.

** Foreign investors were net buyers of A-shares on Thursday, with Refinitiv data showing inflows of more than 2.7 billion yuan ($399.54 million) through Stock Connect.

($1 = 6.7578 Chinese yuan) (Reporting by Andrew Galbraith)

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