China stocks snap three-day slide on domestic chip optimism

HONG KONG, Dec 5 (Reuters) - China stocks edged higher on Friday, snapping a three-day losing streak and reversing earlier losses in the week, as renewed optimism on domestic chipmakers boosted sentiment.

The Shanghai Composite Index .SSEC closed up 0.7% to 3,902.81, marking its first daily gain after three consecutive declines and bringing the week's advance to 0.4%.

The blue-chip CSI 300 Index .CSI300 added 0.8% and has gained 1.3% this week.

In Hong Kong, the benchmark Hang Seng Index .HSI climbed 0.6% and has gained 0.9% for the week. The tech index .HSTECH added 0.8%.

In focus on Friday, Moore Threads 688795.SS - often called "China's Nvidia" - surged roughly fivefold in its trading debut as investors bet the U.S.-sanctioned firm will gain from Beijing's push to strengthen domestic chip production.

Its explosive debut followed news that a bipartisan group of U.S. senators introduced a bill on Thursday aiming to prevent the Trump administration from easing restrictions on China's access to advanced AI chips from Nvidia NVDA.O and AMD AMD.O for the next 2.5 years.

China's tech breakthroughs, as well as "national pride", amid geopolitical tensions, are set to continue being a main pillar for the slow bull market for the next 6-12 months, said Patrick Pan, China equity strategist at Daiwa Capital Markets in Hong Kong.

"From a longer-term perspective, we believe the recent pullback of China equities should have freed up more upside for the next year," he said in a note.

Also lifting the market on Friday was the insurance sector .CSI399809, which rallied 4.5% to the highest level since Nov 14, after the sector's regulator said it will lower the risk factor for insurers holding certain stocks, a move that could reduce capital requirements and free up more funds for investment.

The CSI 300 Real Estate Index .CSI000952 was down 0.2%, continuing the recent slide. China's home prices are forecast to decline 3.7% this year, and are likely to fall through 2026 before stabilising in 2027, according to the latest Reuters survey.