SHANGHAI: China and Hong Kong stocks slipped on Tuesday, weighed down by technology shares, as investors locked in profits following a sharp rally in artificial intelligence-related names and turned their focus to the country’s largest-ever military parade.
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China’s blue-chip CSI300 Index dropped 0.9% by the lunch break, while the Shanghai Composite Index lost 0.8%. Hong Kong benchmark Hang Seng shed 0.6%.
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Tech shares have been a key driving force behind China’s bull run this year, with tech-focused STAR50 index jumping 40% so far this year.
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Despite the recent sharp gains in tech shares, valuations remain relatively contained, said analysts at Dongxing Securities.
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“A moderate degree of bubble may be necessary to spur innovation, with China’s focus on artificial intelligence as a core driver of industrial development seen as a clear strategic direction,” they said.
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Meanwhile, China’s outstanding margin financing touched a new record high of 2.29 trillion yuan ($320.15 billion), surpassing the previous peak set a decade ago, as investors ramped up leveraged bets to chase the stock market rally.
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The start-up board ChiNext Composite Index declined 3.2%. The index has advanced nearly 40% so far this year. ** Shares of Chinese chip firm Cambricon Technologies , which have doubled since the end of July, were roughly flat.
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Tech majors in Hong Kong dipped 1.8%.
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While China is still catching up on software applications, optimism is rising thanks to a growing talent pool and rapidly evolving downstream AI models, panelists said at a UBS A-share conference.
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Investors are now focussed on the military parade on Wednesday, which President Xi Jinping is scheduled to address.
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The CSI Defense Index fell 3%.
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