HONG KONG: Chinese tech stocks reversed their rally on Thursday after reaching multi-year highs, as AI-driven gains slowed amid traders locking in profits and renewed concerns over the country’s economic challenges.
The Hang Seng Tech Index closed nearly 1% lower, after rising 4.2% to its highest point since 2022 earlier in the day. The city’s benchmark Hang Seng Index weakened 0.2% to retreat from a four-month high.
Among the biggest decliners, chipmaker SMIC slid 4.1% and rival Hua Hong Semiconductor tumbled 5.2%.
Shares of internet companies pared early gains. Alibaba closed 2.6% higher after briefly touching a three-year high following Chairman Joe Tsai’s announcement that the e-commerce giant will partner with Apple on AI for iPhones sold in the China market.
Baidu finished 5.7% higher, well off its intraday peak of 12%, following news that the company would offer its AI chatbot Ernie Bot free of charge from April 1.
Mainland stocks also weakened, with China’s blue-chip CSI300 Index and the Shanghai Composite Index both slipping by around 0.4% each to retreat from their highest levels so far this year.
“Technology innovation alone cannot resolve China’s structural economic imbalance or cyclical deflationary problems,” analysts at Morgan Stanley said in a note on Thursday.
“As we go through the policy vacuum period until the March NPC, concerns about the macro slowdown are likely to reduce the broad beta opportunity.”
Still, Hong Kong’s benchmark index has advanced 8.8% so far this year, making it the best performer among major markets in the region, largely due to DeepSeek-triggered tech rally and China’s market rescue measures last month.
Meanwhile, the Hang Seng Tech index has rallied over 60% since the September trough, as it may finally be beginning to slough off years of underperformance, driven by government crackdowns on tech giants and a dour broader mood, said Nick Ferres, chief investment officer at Vantage Point Asset Management in Singapore.
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