NEW YORK, NY – SEPTEMBER 19: Chinese flags fly outside the New York Stock Exchange (IPO) during the initial price offer (IPO) of Alibaba Group in New York City on September 19, 2014. The New York Times reported yesterday that Alibaba has raised $21.8 billion in its initial public offering so far.
Andrew Burton | Getty Image News
Hong Kong-listed tech stocks fell into corrections on Monday as investors booked profits, while uncertainty in the trade war and the gradual U.S. restrictions on high-end technology access in Beijing also shocked people by emotions.
Hang Seng Tech index tracks some of the largest Chinese technology companies listed in Hong Kong and has fallen 11% It has fallen more than 2% on Monday since its March 18 high.
Chinese and international institutional investors began returning to Chinese stocks after Beijing announced stronger stimulus measures last September. Investor inflows pushed the Hang Seng Tech index to its three-year high earlier this month.
Since the release of the R1 model of AI startup DeepSeek in January, Chinese tech stocks (Chinese tech stocks) have raised questions about the U.S.-led AI ecosystem, claiming that it is much lower than other established AI players.
Hong Kong stocks, especially Alibaba and Tencent, see Net purchases from mainland Chinese investors hit High record recent.
“There are also a lot of fake rallies in the last three years in China’s tech stocks, and that’s probably the same,” said Dan Niles of Niles Investment Management.
Clearnomics CEO James Liu told CNBC that the Chinese market is still more volatile than the U.S. and other developed markets, adding that factors such as the growing trade war may continue to increase volatility.
“For most investors, investing in Chinese tech stocks should be seen as a diversified way to diversify portfolios that may have been over-focused on U.S. technology,” Liu said.
“There is no specific bad news for Chinese tech stocks, so the recent corrections are largely due to profitability and a relatively gentle Chinese recovery,” said Vincent Chan, a Chinese strategist at Aletheia Capital.
The pullback was “normal” after a strong rally this year, echoing Vey-Sern Ling, senior equity adviser at UBP, who believes investor sentiment remains positive about the country’s technology sector.
“Innovation is back and the government is clearly supporting it,” Lin said, adding that Chinese tech stocks can still enjoy higher income seasons in good income seasons, while low valuations relative to their global peers.
According to FACTSET data, the MSCI China Index is currently trading at 12.58 times the estimated 1-year return, while the S&P 500 index is trading at 1-year, and the S&P is trading at 20.21 times the expected 1-year return.
