China's Rare-Earth Squeeze Raises Tensions with Japan

Li Chen
24 Jun, 2026
Hong Kong

Benchmark indexes in China hugged the flatline amid a lack of fresh market-moving news. 

The Hang Seng Index traded around the flatline, and the mainland-focused CSI 300 Index inched higher 0.1%. 

Investors remained on the sidelines following last week's mixed economic data, lack of corporate news, and another down day in AI- and semiconductor-linked stocks. 

In overnight trading in New York, the S&P 500 index decreased 1.4%, and the tech-dominated Nasdaq Composite declined 2.2%, driven by sharp losses in Nvidia, Alphabet, Meta, Tesla, Microsoft, and Amazon. 

In addition, rising tensions between Japan and China kept market enthusiasm in check. 

China's shipments of rare-earth magnets in May fell to the lowest level since May 2025, when Beijing imposed its global export control regime. 

The tighter export control has effectively halted shipments of certain tungsten products, terbium, yttrium, and dysprosium, triggered by diplomatic disputes over Taiwan. 

The shipments of rare-earth minerals have dropped as much as 80% from a year ago, disrupting supply chains for automobile and technology product makers and prompting efforts to diversify sourcing.

 

China Indexes and Stocks 

The Hang Seng Index increased a fraction to 23,344.67, and the mainland-focused CSI 300 Index added 0.1% to 4,925.42.

Knowledge Atlas Technology advanced 5.5% to HK$2,290.0, and the AI model maker rebounded from sharp losses in the previous session. 

AI- and semiconductor-linked stocks struggled to advance amid a lack of market-moving news and weakness in tech stocks in overnight trading in New York. 

NAURA Technology gained 3% to ¥769.94, SMIC jumped 8.4% to HK$84.40, and Foxconn Interconnect Technology advanced 1.7% to HK$7.66.