China and Hong Kong Stocks Fall as AI, Chip Rally Fades
China and Hong Kong stocks slipped on Tuesday, ending a three-day winning streak. Investor excitement for artificial intelligence (AI) and chip stocks cooled, while traders monitored new tariff threats from US President Donald Trump.
Key Indexes Retreat
China’s blue-chip CSI300 Index fell 0.4% by midday, while the Shanghai Composite Index edged down 0.2%. In Hong Kong, the Hang Seng Index dropped 0.6%, with tech stocks leading the decline.
Shares in Hong Kong-listed technology majors fell 1.6%, snapping a three-day rally. Meanwhile, Chinese AI stocks rose just 0.4%, slowing after a strong 12% surge driven by startup DeepSeek’s recent momentum following the Chinese New Year holidays. Semiconductor shares dropped nearly 1% after Trump raised tariffs on steel and aluminium imports to 25% on Monday.
US Tariff Threats Weigh on Markets
President Trump announced further tariff plans, targeting countries that impose duties on US goods. He suggested tariffs could soon apply to cars, semiconductor chips, and pharmaceuticals.
The announcement triggered a sell-off in Chinese auto stocks. Shares of Xpeng and Geely Auto tumbled more than 7%, amid fears they would struggle to compete with BYD after it announced plans to offer smart driving features across almost all its models for free. BYD’s stock rose 0.2%.
UBS analyst Paul Gong noted that intelligence initiatives would remain a key theme among Chinese automakers. He predicted that Chinese carmakers would lead global innovation in automotive intelligence, making advanced technologies more accessible in mass-market vehicles.
CATL Plans Major Hong Kong Listing
In other news, Chinese battery giant CATL is set to file for a Hong Kong listing to raise at least $5 billion, according to sources familiar with the matter.
US-China Trade Outlook
President Trump confirmed he had spoken with Chinese President Xi Jinping since his return to office, but he provided no details. While signs of progress on trade talks remain limited, expectations for a breakthrough between Beijing and Washington are still high.
with inputs from Reuters
