(Bloomberg) -- A week of rare wins for Chinese President Xi Jinping on the geopolitical front has done little to dispel the persistent pessimism that’s gripped the world’s second-largest equities market.

This was seen a crucial period for investors in China, not least because of Xi’s much-awaited meeting with US President Joe Biden. And while the two leaders agreed to restore high-level military communications, combat fentanyl and open a dialogue over artificial intelligence, such developments were written off as small wins by traders, who want to see more progress on bigger issues like US curbs on chip exports and tariffs.

China’s benchmark CSI 300 Index capped its worst week in about a month on Friday, even as equities rallied globally after US inflation data spurred bets that the Federal Reserve won’t raise interest rates further. Foreign funds sold Chinese stocks this week, adding to outflows from the market that’s staring at an unprecedented third straight year of losses.

While sentiment has improved “marginally,” the developments over the past week don’t change core issues like the US-China competition in high-end technology as well as the long-term downturn in the property market, said Fanwei Zeng, an investment analyst at GAM Investments in Hong Kong.

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The market strain from the US and China battle for technological dominance was underscored as shares of Alibaba Group Holding Ltd. plunged on Friday after the Chinese e-commerce leader scrapped a plan to carve out its cloud unit, citing US restrictions on exporting cutting-edge chips.

China’s tech sector was already in focus this week as investors parsed earnings from the likes of Tencent Holdings Ltd. and JD.com Inc. The Hang Seng Tech Index capped its biggest two-day drop in a month on Friday, with those shares also sliding amid the weak broader sentiment despite reporting positive results.

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Investors also assigned little importance to a key development in Taiwan, which has been the forefront of increasingly fraught ties between Beijing and Washington. Opposition parties in the democratically ruled island this week agreed to run a joint campaign in January’s election, raising the chances that a more China-friendly government takes power in Taipei.

The newsflow has been good, but it isn’t “enough to be a game changer given investors’ concern over China property,” said Sonija Li, an analyst at MIB Securities Hong Kong Ltd.

The real estate sector remains at the heart of the deeply entrenched gloom in China’s markets, and was a source of concern again this week. Data on Thursday showed home prices fell the most in eight years in October in a sign that the industry’s slump is worsening, acting as a reminder of China’s sluggish economy. That also offset optimism sparked the previous day by a report that Beijing is mulling at least 1 trillion yuan ($139 billion) of low-cost financing to shore up the struggling sector and triggered fresh declines in developers’ shares.

Foreign investors offloaded 5 billion yuan of onshore China stocks on a net basis this week. Having lost almost 8% so far this year, the CSI gauge is one of the world’s worst-performing major equity indexes.

Beijing will need to provide “continued policy support” to regain investors’ confidence in the local stock market, said Minyue Liu, an investment specialist for Asian and Greater China equities at BNP Paribas Asset Management in Hong Kong. “We still expect to see more measures coming.”

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