Hong Kong stocks tread water as tech giants stumble on AI bubble jitters
Hang Seng Tech Index slides after US equities slump, while investors await inflation report
The Hang Seng Index edged up 0.1 per cent to 25,498.13 at the close. The Hang Seng Tech Index dropped 0.7 per cent. On the mainland, the CSI 300 Index slid 0.6 per cent and the Shanghai Composite Index added 0.2 per cent.
Xiaomi, the Chinese smartphone and electric vehicle maker, tumbled 2.5 per cent to HK$40.20 and Pop Mart International Group, maker of blockbuster plush toy Labubu, shed 1.3 per cent to HK$193.20 on concerns about whether its profitability could be sustained. Alibaba Group Holding lost 1.3 per cent to HK$144.10 and Baidu slipped 0.8 per cent to HK$117.60.
On the upside, China Petroleum and Chemical Corp, also known as Sinopec, rallied 6.5 per cent to HK$8.01 and China Merchants Bank added 2.4 per cent to HK$50.60.
Sentiment was skittish on the back of the overnight rout in US equities, with the Nasdaq 100 losing almost 2 per cent. With valuations at lofty levels, stocks were vulnerable to even slightly negative news headlines. Oracle, a proxy for AI infrastructure investments, tumbled more than 5 per cent after a long-time partner reportedly refused to finance a US$10 billion data centre. The episode added to concerns about the scale of AI spending by US tech companies and whether these outsize investments could generate the returns investors expect.
“Concerns about tech names have intensified,” said Chen Meng, an analyst at Soochow Securities. “There are some cases of AI sales falling short of investors’ high expectations, thus raising the doubt about an AI bubble. Stocks need to wait for fresh catalysts before they can come back.”