Chinese and Hong Kong stocks fell on Friday as a technology selloff on Wall Street sparked fears about the artificial intelligence boom. The CSI300 Index dropped 1.5% while the Hang Seng Index fell 1%. Jason Hsu said that China's sentiment-driven equity market remained heavily influenced by the performance of US stocks.
Chinese and Hong Kong stocks fell on Friday as a technology-led selloff on Wall Street spread across Asian markets, intensifying concerns that the artificial intelligence boom could be losing momentum. However, bargain hunting helped mainland Chinese equities recover some ground after an initial wave of heavy selling, supported by Beijing's efforts to stabilise markets, Reuters reported.
China's blue-chip CSI300 Index declined 1.5% by the midday break, although it remained on track to end a 12-week losing streak. The Shanghai Composite Index dropped 1.1%.
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Technology stocks faced steeper losses, with the tech-focused Star 50 Index and the AI Index plunging as much as 5% before recovering some ground.
In Hong Kong, the benchmark Hang Seng Index was down 1%, while the Hang Seng Artificial Intelligence Index tumbled 4%, reflecting mounting investor concerns over the outlook for the global technology sector.
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The selloff followed a sharp decline on Wall Street overnight, when the Nasdaq recorded its biggest single-day fall since April 2025. The rout wiped trillions of dollars off market valuations as investors worried that a Democratic victory in the US midterm elections could lead to tighter regulatory scrutiny of the artificial intelligence industry.
The risk-averse sentiment spread across Asia, with South Korea's KOSPI plunging more than 8% at one point, while Japan's Nikkei fell 5%.
According to Reuters, investors increasingly questioned whether the global AI-driven stock rally could sustain its momentum following the sharp correction in US technology shares.
Chinese AI stocks bear the brunt
Chinese AI hardware companies with significant exposure to the US market were among the biggest losers.
Zhongji Innolight, a manufacturer of optical transceivers used in data centres that generates most of its revenue in the United States, slumped 8% to a one-year low. Rival Eoptolink Technology tumbled 7%.
AI software companies also came under pressure. Zhipu plunged as much as 15.4% amid concerns that a broader backlash against the AI industry could threaten the timeline of Anthropic's planned initial public offering.
The weakness reflects the influence of US technology stocks on investor sentiment in China, where technology companies account for a significant portion of market valuations.
Jason Hsu, founder and chairman of Rayliant Global Advisors, told Reuters that China's sentiment-driven equity market remained heavily influenced by the performance of US AI stocks. Concerns about a potential bubble in the American AI sector could therefore weigh on Chinese technology shares as well.
Bargain hunting limits mainland losses
Despite the initial panic selling, bargain hunting helped Chinese mainland equities pare losses during the session.
The market also remained on course for weekly gains following support measures announced by Beijing and renewed commitments by policymakers to prevent systemic financial risks.
However, analysts cautioned that China was unlikely to remain completely insulated from the global technology selloff, particularly given the intensity of the selling on Wall Street.
Pepperstone strategist Dilin Wu told Reuters that the broader Chinese AI supply chain should not be treated as a single investment theme.
She noted that China's push for technological self-reliance also supported the growth prospects of domestic AI chipmakers such as Huawei and Cambricon.
Nevertheless, the global rush by investors to reduce risk exposure could put pressure on even fundamentally strong companies, highlighting the vulnerability of technology stocks to shifts in market sentiment.
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