SHANGHAI, June 28 (Reuters) - China and Hong Kong stocks fell on Wednesday, after profit at Chinese industrial firms declined in May, and on news that the U.S. is weighing new restrictions on AI chip exports to China.
** China's blue-chip CSI300 Index and the Shanghai Composite Index both lost 0.5% by the lunch break. Hong Kong's benchmark Hang Seng Index was down 0.1%.
** Profits at China's industrial firms tumbled 18.8% year-on-year in the first five months of 2023, data showed on Wednesday, as companies were hit by a squeeze in margins from softening demand amid a stumbling post-COVID economic recovery.
** Goldman Sachs analysts said in a note that China's industrial profits rose, while revenue declined from April to May.
** "The sequential improvement was likely related to ongoing policy support for manufacturing sector," the analysts said.
** A Wall Street Journal report said that the United States may stop shipments of AI chips made by Nvidia and others to China.
** Artificial intelligence (AI) related stocks traded in China took a hit on the news, and were down as much as 4.8%. Media stocks tumbled 4.1%.
** Northbound trading saw a net capital outflow of 7.1 billion yuan ($982.4 million) by the lunch break, on track to reach the largest daily outflow in a month.
** In the property sector, Hong Kong private home prices retreated 0.7% in May from April, the first fall in four months, as many home buyers stayed on the sidelines amid uncertainty over interest rate hikes and the economic outlook.
** Meanwhile, a few developers including Gettown Holdings and CCCG Real Estate Corp received regulatory approval for share private placements, though their share prices reacted minimally to the news. ($1 = 7.2270 Chinese yuan renminbi) (Reporting by Shanghai Newsroom; Editing by Varun H K)
