Hong Kong stocks resume decline as tech giants stumble on AI bubble jitters

The Hang Seng Index fell 0.4 per cent to 25,357.64 at the noon break, hovering around a three-week low. The Hang Seng Tech Index dropped 1.3 per cent. On the mainland, the CSI 300 Index slid 0.6 per cent and the Shanghai Composite Index added 0.2 per cent.

Xiaomi, the Chinese smartphone and electric vehicle maker, tumbled 3.1 per cent to HK$39.94 and search engine operator Baidu sank 1.8 per cent to HK$116.50. Alibaba Group Holding lost 1.6 per cent to HK$143.70 and Tencent Holdings slipped 0.6 per cent to HK$601.50. Pop Mart International Group, maker of blockbuster plush toy Labubu, shed 2.7 per cent to HK$190.40 on concerns about whether its profitability could be sustained.

The pullback mirrored the overnight rout in US equities, with the Nasdaq 100 losing almost 2 per cent. With stock valuations at lofty levels, even slightly negative news headlines could sour sentiment. Oracle, a proxy for AI infrastructure investments, tumbled more than 5 per cent after a long-time partner reportedly refused to finance a US$10 billion data centre. The episode added to concerns about the scale of AI spending by US tech companies and whether these outsize investments can generate the returns investors expect.

“Concerns about tech names have intensified,” said Chen Meng, an analyst at Soochow Securities. “There are some cases of AI sales falling short of investors’ high expectations, thus raising the doubt about an AI bubble. Stocks need to wait for fresh catalysts before they can come back.”

Investors are also keeping an eye on the US November inflation data due on Thursday night. A soft reading will bolster the case for the Federal Reserve to cut interest rates in January, a move that could ease concerns about the frothy valuations of AI-linked stocks. Consumer prices probably rose 3.1 per cent from a year ago in November, compared with a 3 per cent increase in September, according to the consensus estimate of economists surveyed by Bloomberg.