China, Hong Kong stocks fall amid global tech selloff

China and Hong Kong stocks declined on Friday as a broader global tech selloff intensified, driven by a sharp drop in US tech stocks. The Nasdaq's steep one-day fall, the worst since April 2025, raised concerns about the sustainability of the AI industry's recent growth.

In mainland China, the CSI300 Index fell 1.5% by midday, though it remained on track to end a 12-week losing streak. The Shanghai Composite dropped 1.1%, with tech-focused indices initially suffering more severe losses before recovering some ground.

Hong Kong's benchmark Hang Seng Index declined 1%, while its AI-specific index fell 4%. The risk-off sentiment from the US market spilled over into Asia, with South Korea's KOSPI dropping over 8% and Japan's Nikkei falling 5%.

Dong Baozhen, chairman of Lingtong Shengtai, noted that the US tech slump had undermined the logic behind the AI-driven rally. He questioned whether AI markets outside the US could sustain growth without US support.

Chinese AI hardware stocks, heavily tied to the US market, were among the hardest hit. Zhongji Innolight fell 8% to a one-year low, while Eoptolink Technology dropped 7%. AI software firms also faced pressure, with Zhipu falling as much as 15.4% due to concerns over a potential AI backlash.

Jason Hsu of Rayliant Global Advisors highlighted the influence of US AI stock performance on China's sentiment-driven market. He emphasized that the focus remains on whether the US AI boom is a bubble, with any signs of collapse likely to impact China's market.

Despite early panic selling, bargain hunters helped reduce losses in China's market, which is still expected to post weekly gains following Beijing's support measures and its commitment to avoiding systemic risks.