Stocks in Hong Kong and mainland China declined sharply on Friday, with technology shares leading the downturn amid investor concerns about the sustainability of artificial intelligence (AI) sector gains. The Hong Kong market closed the week with its worst performance in over a year, extending a broader sell-off in tech stocks across the region.
The Hang Seng Index dropped 1.8 percent to finish at 22,671.86 points, marking a weekly decline of 5.2 percent, the largest since April 2025. The Hang Seng Tech Index fell 3.4 percent, reflecting investor caution toward technology companies. On the mainland, tech-heavy indices also recorded losses. The Star Market 50 Index, which tracks Shanghai’s tech stocks, declined 1.7 percent, while the ChiNext 50 gauge for Shenzhen-listed startups fell 4.6 percent. The broader CSI 300 Index slipped 3 percent.
This downward trend follows earlier gains driven by optimism around AI developments but has recently been dampened by factors including a shift toward tighter monetary policy by the U.S. Federal Reserve and growing skepticism over AI’s near-term revenue potential. Investors are increasingly demanding clearer evidence that AI-related investments will translate into sustainable profit growth, prompting a re-evaluation of lofty valuations.
Gary Dugan, CEO of The Global CIO Office, which advises family offices and high-net-worth investors, noted that the AI sector is evolving from speculative “concept” investing to a focus on actual execution. He said this transition is “a healthy development” but cautioned that it could lead to greater dispersion in performance among companies.
Concerns about China’s fragile consumer sentiment have also impacted investor confidence in Hong Kong’s major internet platforms, which face challenges such as weakening retail sales and intensified regulatory scrutiny, including investigations into subsidy practices aimed at customers.
The technology sell-off in Greater China coincided with a similar pullback in other Asian markets with significant chipmaking exposure. South Korea’s Kopsi index tumbled as much as 9 percent on Friday, prompting a second trading halt during the week. Taiwan’s Taiex declined 3.6 percent, reflecting broader concerns over leveraged positions in semiconductor stocks.
Among individual stocks, Alibaba Group Holding saw a 5.8 percent decline to HK$89.50, bringing its weekly losses to 15 percent amid allegations from U.S.-based AI firm Anthropic that Alibaba improperly leveraged its Claude AI model technology. Tencent Holdings fell 2.3 percent to HK$411.80. AI companies MiniMax Group and Knowledge Atlas Technology (Zhipu AI) lost 6.5 percent and 13 percent respectively.
Apple supplier Luxshare Precision Industry was among the hardest hit in the hardware segment, dropping 8.6 percent to 68 yuan in Shenzhen trading following Apple’s recent price increases on MacBook and iPad models. Lens Technology, another Apple supplier, experienced a milder 0.9 percent decline to HK$27.38 in Hong Kong.
Overall, the combination of regulatory pressures, shifting investor sentiment on AI, and macroeconomic uncertainties has weighed heavily on technology stocks in Hong Kong and mainland China, leading to notable weekly losses across key indices.