Hang Seng Index heads for worst week in over a year as renewed sell-off engulfs tech names
A more than 8 per cent slump in South Korea’s Kospi index, which is at the centre of the AI trade in Asia, further unsettles investors
The Hang Seng Index fell 2.3 per cent to 22,538.65 at the noon break, heading for a 5.8 per cent loss this week. If the rate of decline holds until the close, it will be the biggest drop for the five-day period since April 11, 2025. The Hang Seng Tech Index dropped almost 4 per cent.
On the mainland, technology stocks led the decline, as the Star Market 50 index tracking Shanghai’s tech board sank 2.6 per cent, and the ChiNext 50 gauge of Shenzhen-listed start-ups lost 4.2 per cent. The benchmark CSI 300 Index slid 2.8 per cent.
The global artificial intelligence trade has stumbled over the past week after rebounding from an oil shock-driven low, as the Federal Reserve pivots to a hawkish stance and investors demand more evidence of AI monetisation that can justify the massive capital expenditure. China’s fragile consumer confidence heightened concerns about earnings growth for Hong Kong-listed big internet platforms that are grappling with slumping retail sales and increased regulatory scrutiny over subsidies.
“Investors want AI exposure but are less willing to pay a single multiple for long-duration growth, margin expansion and market leadership simultaneously,” said Gary Dugan, CEO of The Global CIO Office, which advises family offices and high-net-worth investors. “The trade is shifting from concept to execution. That is a healthy development, but it means dispersion will rise.”
Signs of an unravelling of the AI trade in South Korea and Taiwan, where sell-offs are amplified by record levels of leveraged bets, further unsettled investors, who were already wary of frothy valuations among tech names. South Korea’s Kopsi index plunged by as much as 9 per cent, triggering a 20-minute trading halt, while Taiwan’s Taiex sank 3 per cent.