Global Market: China stocks rebound on AI, chip rally; Hong Kong shares slip

Chinese equities advanced on Tuesday, led by a sharp rebound in artificial intelligence and semiconductor stocks after a recent selloff, while Hong Kong markets traded lower despite strength in select technology names. According to Reuters, renewed optimism over China's AI sector and a broader global technology rally helped lift mainland shares.

The Shanghai Composite Index rose 0.2% to 3,815.59 by the midday break, while the blue-chip CSI 300 Index gained 0.9%.

Technology stocks outperformed the broader market, with the ChiNext Price Index surging 4.8% and the STAR 50 Index climbing 2.9%. The gains reflected renewed investor interest in growth-oriented sectors after recent corrections.


AI and semiconductor-related stocks led the rally. The CSI Artificial Intelligence Index jumped 4.6%, the CSI Semiconductor Index gained 3.2%, and the CSI 5G Communication Index soared more than 7%, recovering from recent lows following sharp declines.

According to Reuters, investor sentiment also received a boost after research firm Artificial Analysis found that a version of Chinese AI startup DeepSeek's flagship model was the least expensive to operate among leading global AI models in benchmark tests. The findings come as DeepSeek seeks to regain momentum amid rising competition from rival AI developers.

Reuters also reported that analysts at J.P. Morgan expect AI-related stocks to regain market leadership through August. The brokerage views the recent weakness in AI-linked shares as a healthy sector rotation rather than the end of the broader AI investment cycle, suggesting the correction may provide more attractive buying opportunities.

Healthcare stocks also posted solid gains, with the sector rising 2.7%. WuXi AppTec surged by the daily 10% limit after reporting stronger-than-expected earnings, adding to positive market sentiment.

In Hong Kong, however, the benchmark Hang Seng Index slipped 0.5%, while the Hang Seng Tech Index edged down 0.2%.

Alibaba bucked the broader weakness, climbing 1.4% to its highest level in two months after unveiling its largest and most advanced artificial intelligence model to date, Reuters reported.

Separately, Reuters noted that a private-sector survey released on Monday showed China's manufacturing activity expanded at its slowest pace in four months during July. Output and new orders continued to grow but at a slower pace, while export orders returned to expansion after contracting previously.

Across the region, Asian equities posted modest gains as investors tracked a global market rally. Oil prices remained near their lowest levels in weeks as the standoff between the United States and Iran showed little sign of escalation, helping support broader market sentiment.