The benchmarks in Hong Kong and China took their cues from declines across most other Asian markets on Friday, with losses being recorded on every major index from Seoul to Sydney. Investors sought refuge after the New York stock market posted its biggest one-day pullback in nearly three months, with the S&P 500 falling 3.5 per cent while the technology-heavy Nasdaq Composite plunged 5 per cent, led by an 8 per cent plunge in Apple’s shares.

Australia’s S&P/ASX 200 dropped 3.1 per cent, while South Korea’s Kospi declined 1.2 per cent. Japan’s Nikkei 225 fell 1.1 per cent. Asian stocks struggled as “investors questioned the sustainability of lofty valuations” of high-flying tech stocks, said Stephen Innes, chief global markets strategist at AxiCorp. “The losses overnight were driven by the same tech stocks that had underpinned the recent heady rises.”

The sell-off in the US markets was sparked by “an accumulation of worries about the rally in the tech sector, overcrowding and rising valuations,” said Kerry Craig, global market strategist at J.P. Morgan Asset Management.

“Governments’ willingness to continue to support household incomes and businesses until a vaccine is readily available or until the virus is brought under control by other means will be key to the outlook from here,” he added.

Technology stocks in Hong Kong dropped in tandem, weighing on the Hang Seng Tech Index of top 30 stocks, which fell as much as 5.4 per cent before paring losses to 1.5 per cent.

AAC Technology, a major supplier of components to Apple, fell 2.1 per cent to HK$47.95. Benchmark heavyweight Tencent also dropped 3 per cent.

E-commerce giant Alibaba declined 3.6 per cent, while mobile phone maker Xiaomi rebounded 2.5 per cent after falling 7 per cent on Thursday.

The three firms replace snack maker Want Want China, developer Sino Land, and China Shenhua Energy on the gauge, signalling a shift from traditional industries to new economy and biotech firms.

Sino Land slipped 0.9 per cent. Want Want China gained 2.6 per cent while China Shenhua Energy rose 1.4 per cent. The two stocks were among 12 blue chips that posted gains.

Infographics: China’s ambitions in semiconductor chips in ‘Made in China 2025’ master plan

Producers of semiconductor chips gained, defying the overall slump in the Chinese stock market, on optimism that the government is poised to unveil policies to spur the country‘s home-grown industry to counter Trump administration restrictions.

Beijing is preparing broad support for so-called third-generation semiconductors for the five years through 2025, Bloomberg reported yesterday, citing people familiar with the matter. A suite of measures to bolster research, education and financing for the industry has been added to a draft of the country’s 14th five-year plan, which will be presented to the country’s top leaders in October, the people said.

Shares of Semiconductor Manufacturing International Corporation (SMIC), the country‘s biggest chip producer, rose1.8 per cent to 66.28 yuan in Shanghai. The stock has more than doubled since its secondary listing in July, following its withdrawal from the New York exchange amid rising US-China tensions. Shares of Tianjin Zhonghuan Semiconductor, which makes discrete semiconductor products, rose 2 per cent to 21.72 yuan.

The same optimism, however, was not shared on the Hong Kong exchange. The Hong Kong-traded shares of SMIC fell 3.9 per cent to HK$23.65 along with the broader market. Shares of Hua Hong Semiconductor, a Shanghai-based chip maker, fell 3.6 per cent to HK$29.15 in Hong Kong.

On the Hong Kong bourse, Galaxy Entertainment led the fall with a 4.8 per cent drop. AIA, which is second to Tencent in weighting on the benchmark Hang Seng Index, fell 3 per cent.

On the CSI300, light-emitting diode (LED) chip maker Sanan Optoelectronics led losses with an 8 per cent plunge.

On the mainland, one stock that traded for the first time soared in its debut on the Shanghai exchange. Jiangsu GoodWe Power Supply Technology, which produces power supply equipment, rose 255.9 per cent to 135 yuan from its initial public offering (IPO) price of 37.93 yuan.