China stocks slide as AI selloff hammers chip supply chain

SHANGHAI: China stocks fell on Monday as a global rout in artificial intelligence-related shares dragged down semiconductor stocks, while Hong Kong’s internet platforms bucked the trend, led by a jump in Alibaba after it released its latest AI model.  

China’s blue-chip CSI300 Index dropped 0.7% by the lunch break, while the Shanghai Composite Index lost 0.6%. Hong Kong benchmark Hang Seng was flat.

The selling in AI-related stocks globally, with the chip-heavy Kospi index down 20% last month in South Korea, has rocked markets and pushed investors to reassess the valuation of China semiconductor stocks.

The tech-focused STAR50 Index fell 3.7%, while the CSI All Share Semiconductor Index dropped 5.2%.

However, shares of newly listed memory chip giant CXMT rose 2.7% as its valuation still appears reasonable compared to other smaller players in the sector.

“We believe that, under the broad assumption that the AI industry trend has not yet reached bubble territory nor come to an end, the recent pullback could actually improve the risk-reward profile of AI trades from a medium- to long-term perspective,” analysts at CICC said in a note.

“Therefore, even though most investors still view AI technology as the core investment theme, after such violent turbulence, a degree of portfolio rebalancing is likely a natural response for many,” they said.

Alibaba shares jumped nearly 7% after it released what it said is its largest and most capable artificial-intelligence model, the Qwen3.8-Max. Tech majors listed in Hong Kong rose nearly 1%.

China’s manufacturing sector expanded at its slowest pace in four months in July, as output and new orders rose more slowly, while export orders returned to growth after a contraction, a private-sector survey showed on Monday. ‑Reuters