China stocks slip as tech weakness overshadows Fed rate decision

SHANGHAI: China stocks slipped on Thursday, as a deepening selloff in tech shares overshadowed the Federal Reserve’s decision to keep interest rates unchanged.

At the midday break, the benchmark Shanghai Composite index lost 0.9%, while the blue-chip CSI300 index fell 1.2%.

Tech shares were among the main drags, with the start-up board ChiNext Composite index falling 3.6% and Shanghai’s tech-focused STAR50 index tumbling 4.2%.

CSI 5G communications, a gauge that measures the industry, plunged 6.1% in morning deals.

Robot maker Yushu Technology, also known as Unitree, , slumped 4.3% after its third-quarter net profit fell despite revenue rising 70% from a year earlier in its first earnings report since listing.

“Valuations for the tech AI hardware names are now close to the historical trough and imply a major deceleration in EPS growth ahead,” said James Wang, head of China strategy at UBS Investment Bank Research.

“We are wary that investor sentiment on AI is fragile; however, we believe the risk-reward is looking more attractive again, and interest may come back towards the end of the year as investors rebuild their portfolios for the new year.”

Across the region, Asian shares gave up earlier gains as AI-related earnings announcements prompted wildly mixed responses, raising the stakes for Amazon and Intel results due later in the day.

The Fed held interest rates steady, as expected, on Wednesday, opting to delay any changes to borrowing costs until after next week’s US midterm elections while it awaits further data on inflation, which the central bank said “remains elevated.”

In Hong Kong, the benchmark Hang Seng index inched up 0.1%, while the city’s tech shares fell 2%.