China stocks fall as investors move between sectors

China stocks fell on Tuesday, while Hong Kong shares edged up, as investors shuffled between sectors during a lull in corporate disclosures.

** China's blue-chip CSI300 Index 3399300 dropped 0.4% by the lunch break, while the Shanghai Composite Index 000001 lost 0.2%. Hong Kong benchmark Hang Seng HSI was up 0.2%.

** China's top-performing A-share sectors in the first three quarters have historically struggled to maintain momentum into the final stretch of the year, UBS analysts said in a note.

** With a 4-5-month window lacking major corporate financial disclosures, valuation gaps between sectors tend to narrow, reinforcing mean-reversion dynamics, they said.

** "Some investors expect the value stocks to catch up in relative performance in the last two months of 2025 and anti-involution could become the main trade theme in the first quarter of 2026," said UBS analysts.

** Artificial intelligence and biotech stocks have led this year's rally in China's equity markets, but their momentum has waned in recent weeks.

** The CSI Banks Index (.CSI399986) rose more than 2%, while the Healthcare Index 0000814 fell 1.6%.

** Geopolitical tensions and uncertainty around China's domestic economic recovery continue to weigh on investor sentiment, underscoring the appeal of dividend and value sectors, including central state-owned enterprises, analysts at Alliance Bernstein said in a note.

** Tech majors traded in Hong Kong HHSTECH were largely flat after media reported that China has increased subsidies that cut energy bills by up to half for some of the country's largest data centres.

** Gold-related shares continued to face headwind, after state banks stopped gold product enrolments and China cut gold tax exemption. The CSI gold industry equity index (.CSI931238) was down 3%.