China shares fall on regional chip rout; Alibaba lifts Hong Kong

SHANGHAI: Mainland China stocks fell on Thursday, weighed by weakness in tech shares following a sell-off among their regional peers, and Alibaba boosted Hong Kong shares, while diminishing expectations of an imminent Federal Reserve rate hike lent support. 

At the midday break, the benchmark Shanghai Composite index slipped 0.8%, while the blue-chip CSI300 index lost 0.9%.

China’s tech-focused STAR50 index dropped 1%, and the start-up board CHINEXT fell 1.7%.

Semiconductor shares were among the biggest losers in morning deals, with the sub-index plunging 2.5%.

The weakness tracked losses in chipmakers in the region, with South Korea’s SK Hynix tumbling more than 12% and rival Samsung Electronics falling nearly 10%. There are growth opportunities in mainland China “in pharma and energy storage, and value in property developers, banks and Internet.

From an earnings angle, we believe 2026 should beat last year,“ said Herald van der Linde, head of equity strategy for Asia Pacific at HSBC.

In Hong Kong, the benchmark Hang Seng Index rose 1.9%, while the city’s tech shares jumped 3.1%.

Gains were led by Alibaba, which leapt 4.8%, after the company said in a statement to Reuters that its Qwen model will be integrated into Apple Intelligence across Apple’s iPhone (iOS), iPad (iPadOS), Mac (macOS) and Vision Pro (visionOS) operating systems in China. Chinese President Xi Jinping is expected to outline an ambitious vision for China’s role in global AI governance at a forum on Friday, as Huawei showcases its most advanced AI computing cluster yet in a sign of Beijing’s drive to build a domestic alternative to US technology.

Separately, investors are turning their focus to the upcoming Politburo meeting, where policymakers are expected to set the economic policy agenda for the second half of the year.

Markets, however, largely view the recent softer-than-expected second-quarter economic data as insufficient to prompt broad-based policy easing.

“We maintain our baseline forecast of no policy rate or reserve requirement ratio (RRR) cuts through the remainder of 2026, though the probability could rise if growth slows further,” said Lisheng Wang, economist at Goldman Sachs.‑Reuters