Hang Seng Tech Index Extends Losses to 2%, Knowledge Atlas and Baidu Lead Declines

Deep News07-14 10:03

Technology stocks in Hong Kong saw a sharp sell-off at the market open.

The Hang Seng Tech Index (HSTECH) extended its early losses to 2%, while the broader Hang Seng Index fell by more than 1%. Among the index constituents, Knowledge Atlas and Baidu Group-SW (ASX: BIDU-SW) shares dropped over 7%, SENSETIME-W (ASX: SENSETIME-W) fell more than 6%, MINIMAX declined close to 5%, and Alibaba-W (ASX: BABA-W) was down nearly 3%.

According to a recent China strategy update from Goldman Sachs, the tactical preference for "A-shares over H-shares" and "hard tech over soft tech" is maintained. However, the firm has started to note potential recovery opportunities for large-cap internet H-shares following valuation corrections. The key to a sustained rebound for H-shares lies not in valuations but in earnings, as profitability continues to be pressured by internet sector subsidy losses and AI-related capital expenditures. The report also notes that while China's AI sector is not broadly viewed as being in a bubble, there are signs of local overheating in the semiconductor sector and among some A-share hard tech stocks.

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