Asian stocks paused their rally on Wednesday as tech shares in Hong Kong faced obstacles. The Hang Seng Index dipped 0.1% to 22,944.24, with losses seen in major companies like Alibaba Group Holding and Baidu. The Hang Seng Tech Index rose 0.6%, but many of its biggest members declined.
On the mainland, the CSI 300 Index climbed 0.7%, and the Shanghai Composite Index added 0.8%. Shen Fanchao, an analyst at Sheshang International in Hong Kong, warned investors to be cautious of a potential pullback in the near term. He cited concerns about the weak recovery in China’s economy and the fact that the market is technically overbought.
Tech stocks in Hong Kong have surged 34% from a January low, indicating that the DeepSeek-led rally might be overstretched. The 14-day relative strength index of both the Hang Seng and the Tech Index rose above 70 this week, a level that often precedes a short-term pullback. Futures on the Chinese Hang Seng Index (CHN.cash) experienced a significant decline, falling 1.5% in the biggest intraday loss since October.
asian stocks waver amid tech setbacks
The drop was attributed to profit-taking in technology and AI stocks, which had recently seen substantial gains. Major Chinese tech companies like Xiaomi and Lenovo saw declines of nearly 5%, while SMIC lost 3%.
The sell-off followed a surge in the Chinese technology benchmark in Hong Kong, which had reached an intraday gain of up to 4.2% before reversing course. The sharp pullback comes as the Hang Seng Tech Index recently hit a three-year high, driven by advancements in AI and technology sectors. However, concerns over potential lack of stimulus from the upcoming Two Sessions in March have prompted investors to cash in on recent gains.
Earlier in the trading day, the Hang Seng Tech Index swung from an intraday gain of as much as 4.2% to a drop of 1.5%, highlighting the volatility in Chinese markets. This marks the largest intraday sell-off since October, emphasizing increasing caution among investors regarding sustained rallies. While the long-term prospects of the Chinese technology and AI sectors remain promising, today’s market movements reflect the complexities and inherent risks of stock trading in emerging markets.
Investors should remain vigilant to the potential for further fluctuations as market sentiment evolves.
