China, HK stocks slip as AI-driven tech rally pauses following Nvidia results

SHANGHAI: China and Hong Kong stocks fell on Thursday, as the tech rally underpinned by artificial intelligence startup DeepSeek paused following AI chip giant Nvidia’s earnings.

China, HK stocks jump as tech rally resumes on AI push

• China’s blue-chip CSI300 Index edged down 0.2% by the lunch break, while the Shanghai Composite Index lost 0.4%. Hong Kong benchmark Hang Seng was down 1.1%.

• “Chinese hardware sentiment is subdued today. When Nvidia’s earnings are largely in-line, related stocks along its value chain in the A-share market typically decline,” said a hedge fund analyst in Hong Kong, who declined to be named as he was not authorised to talk to media.

• Nvidia shares rose after it posted fourth quarter earnings which largely met market expectations, before declining slightly in choppy extended trading.

• China’s artificial intelligence shares dropped 2.5%, while chipmaker shares were down 1.8%. Hong Kong’s tech majors were down 2.5%.

• Tech shares have risen most weeks this year, underpinned by optimism that DeepSeek’s success is reshaping perceptions of China tech companies.

• “Market sentiment and private sector confidence are improving, particularly among the tech sectors. This is encouraging, though broader economic challenges would still require stronger policy support and reforms,” said Robin Xing, chief China economist at Morgan Stanley.

• “The upcoming Two Sessions are expected to make some progress, but a decisive break from deflation will require a shift in mindset and robust reforms in social welfare, debt restructuring, and business confidence,” Xing said.

• Parliamentarians and political advisers will gather in Beijing next week for two parallel sets of meetings called the “Two Sessions”.

• Steve Alain Lawrence, CIO at Balfour Capital, said the recent tech rally was not a bubble as Chinese tech companies were still trading at a deep discount to its US peers. But he cautioned that pullbacks in those stocks can be vicious and some AI stocks were surging purely on momentum.