SHANGHAI: China and Hong Kong stocks ended lower on Tuesday, weighed by technology shares as investors locked in profits following a sharp rally in AI-related names and ahead of Chinese President Xi Jinping’s speech on Wednesday.
China’s blue-chip CSI300 Index declined 0.7 percent, while the Shanghai Composite Index lost 0.5 percent. Hong Kong benchmark Hang Seng shed 0.5 percent.
Tech shares have been a key driving force behind China’s bull run this year, with tech-focused STAR50 index jumping 34 percent so far.
Despite the sharp gains, tech valuations remain relatively contained, said analysts at Dongxing Securities.
“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.
Meanwhile, China’s outstanding margin financing touched a 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.
The start-up board ChiNext Composite Index declined 2.8 percent. The index had advanced 15 percent over the past month.
Shares of Chinese chip firm Cambricon Technologies, which had doubled since the end of July, rose 2.2 percent.
Tech majors in Hong Kong dipped 1.2 percent.
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 on Monday.
Investors are now focussed on the military parade on Wednesday, which President Xi is scheduled to address. The CSI Defense Index fell 2.3 percent.