Tech Sell-off Dampens China and Hong Kong Markets Amid Anticipation of Xi's Speech
China and Hong Kong stock markets closed lower with a fall in technology shares as investors secured profits from AI-driven rallies, ahead of President Xi Jinping's address. Although tech has propelled growth, concerns about valuations persist. Margin financing hit record highs, reflecting increased leveraged investments.
China and Hong Kong stock markets faced declines on Tuesday, primarily dragged down by a drop in technology shares. Investors sought to secure gains following a series of strong performances in the AI sector, with eyes on President Xi Jinping's upcoming speech set for Wednesday.
The blue-chip CSI300 Index of China fell by 0.7%, while the Shanghai Composite Index saw a 0.5% drop. Hong Kong's Hang Seng Index also declined by 0.5%. Despite a surge this year, the tech-focused STAR50 index has climbed 34% so far, indicating a robust but cautious approach to tech valuation.
Analysts from Dongxing Securities noted that some speculative gambling might be inevitable to drive innovation, pointing toward AI's pivotal role in China's industrial strategy. Meanwhile, margin financing in China soared to 2.29 trillion yuan, its highest level in ten years, as investors poured more leveraged funds into the stock rally.
(With inputs from agencies.)
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