China stocks fall to 1-year low as Trump-Xi summit optimism fades

By Reuters News

SHANGHAI, Sept 28 (Reuters) - China's blue-chip index dropped more than 2% to a one-year low on Monday, as optimism over the US-China summit faded, leaving investors focused on deepening economic imbalances and geopolitical risks.

** Technology shares slumped after the US moved toward restricting the use of Chinese-made components used in AI data centres, dampening an already thin risk appetite ahead of a week-long holiday from October 1.

** The large-cap CSI300 Index .CSI300 ended the session 2.2% lower, its biggest loss in five weeks and touching its lowest point since August 2025.

** The Shanghai Composite Index .SSEC declined 1.7%.

** Stocks in Hong Kong, where the market will be open during China's Golden Week holiday except for October 1, rose 0.5%.

** US and China said they have agreed to reduce tariffs on $30 billion of goods in each direction, and launch a dialogue on AI, following a meeting between Chinese President Xi Jinping and US President Donald Trump in Washington.

** Despite the optics of the summit, "the US and China remain divided across technology, security, trade and the broader architecture of international governance," OCBC Bank said in a note.

** Reflecting such divisions, US lawmakers introduced legislation on Friday to bar the federal government from equipping sensitive government systems with Chinese-made components used to transmit data in AI data centres.

** It weighed on Chinese optical transceiver makers Eoptolink Technology 300502.SZ and Innolight Technology 300308.SZ, both of which were named explicitly by the US senators.

** Eoptolink tumbled 8% in Shenzhen while Innolight slumped 9% and 12%, respectively, in Shenzhen and Hong Kong.

** China's CSI 300 Telecommunication Services Index .CSI000916 slumped more than 6% to a two-month low.

** Chinese chipmakers .STARCHIP slumped after news that China could allow some domestic companies like ByteDance and Alibaba 9988.HK to buy Nvidia's NVDA.O chip built for high-end professional computers.

** China's tech-focused STAR Market .CSI000680, startup board ChiNext .CHINEXTC and the small-cap CSI3000 Index .CSI932000 each fell roughly 4%.

** China's industrial profit growth slowed in August, highlighting deepening economic imbalances.

** Xiangcai Securities said in a note that "risk aversion mood is permeating ahead of the long holiday."

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