Hang Seng Index closes out worst week in over a year in renewed tech sell-off

The Hang Seng Index fell 1.8 per cent to 22,671.86 at the close, rounding out a 5.2 per cent loss this week – the biggest weekly drop since April 11, 2025. The Hang Seng Tech Index dropped 3.4 per cent.

On the mainland, technology stocks led the decline, as the Star Market 50 index tracking Shanghai’s tech board sank 1.7 per cent, and the ChiNext 50 gauge of Shenzhen-listed start-ups tumbled 4.6 per cent. The benchmark CSI 300 Index slid 3 per cent.

The global artificial intelligence trade has stumbled over the past week after rebounding from an oil shock-driven low, as the Federal Reserve pivots to a hawkish stance and investors demand more evidence of AI monetisation that can justify the massive capital expenditure. China’s fragile consumer confidence heightened concerns about corporate earnings for Hong Kong-listed big internet platforms that are grappling with slumping retail sales and increased regulatory scrutiny over subsidies for customers.

“Investors want AI exposure but are less willing to pay a single multiple for long-duration growth, margin expansion and market leadership simultaneously,” said Gary Dugan, CEO of The Global CIO Office, which advises family offices and high-net-worth investors. “The trade is shifting from concept to execution. That is a healthy development, but it means dispersion will rise.”

Signs of an unwinding of record-high leveraged bets on AI stocks in South Korea and Taiwan, which are heavily weighted towards chipmakers, further soured sentiment in Asian trading. South Korea’s Kopsi index plunged by as much as 9 per cent on Friday, triggering a second trading halt in the week, and Taiwan’s Taiex sank 3.6 per cent. Increased participation by investors taking out loans to buy stocks amplifies swings in the two markets, creating a fresh headwind for the AI trade, which is already treading on elevated valuations.