Chinese equities retreated over the past week as investors shifted away from technology and other high-growth sectors amid surging oil prices, rising global bond yields and renewed questions over the pace of artificial intelligence investment. Hong Kong technology stocks were the biggest losers: the Hang Seng TECH Index fell 4.6% from 4,527.71 on September 7 to 4,317.94 on September 14. The decline highlights the sensitivity of China’s technology trade to global risk sentiment even as Beijing continues to channel capital toward AI and semiconductor development.
Mainland markets proved more resilient but still weakened. The Shanghai Composite slipped 1.2% from 3,932.70 to 3,885.33, while the Shenzhen Component fell 2.8% from 13,774.92 to 13,384.57. Growth stocks bore the brunt of the pressure. On Monday alone, the technology-heavy STAR 50 dropped 1.6% to 1,528.27 and the ChiNext lost 1.1% to 3,285.58, while banks gained as investors moved toward more defensive sectors. The weakness reflected external pressures more than a sudden deterioration in domestic fundamentals: oil above $100 a barrel has revived inflation concerns globally, while markets expect tighter monetary policy in the US and Japan.
Hong Kong underperformed the mainland. The Hang Seng fell 2.0% over the seven-day period, from 25,413.12 to 24,917.60, despite gaining 0.45% on Monday. Mainland investors nevertheless continued buying Hong Kong shares through Stock Connect—the cross-border trading system linking mainland and Hong Kong exchanges—with southbound net purchases totaling around HK$20.1 billion during September 7–11 and another HK$4.47 billion on Monday. This suggests domestic investors continue to see value offshore even as broader international risk appetite has weakened.
AI remained a major capital-market theme despite the sell-off. Z.AI launched a $5 billion fundraising through a Hong Kong share placement and convertible bonds, while Moonshot AI is exploring Hong Kong and Shanghai listings. DeepSeek, meanwhile, is preparing for a potential STAR Market IPO. The deals underline Beijing’s success in steering capital toward strategic technology, even as valuations come under pressure.
The week’s trading therefore points to a market increasingly divided between confidence in Beijing-backed strategic industries and concern over their near-term valuations. Mainland resilience and continued southbound buying suggest domestic liquidity remains supportive, but Hong Kong’s sharper technology losses show foreign-facing Chinese assets remain exposed to global rates, energy prices and changing expectations for AI spending. Those pressures, alongside upcoming Chinese economic data and major central-bank decisions will set the tone for the coming week.