Global Market: Hong Kong stocks slump to four-month low as China stimulus hopes fade

Hong Kong stocks tumbled to a four-month low on Thursday, while mainland Chinese blue-chip shares moved closer to a technical bear market, as a selloff in technology stocks and fading expectations for fresh economic stimulus weighed on investor sentiment.

The Hang Seng Index plunged 2.9%, while Hong Kong's technology stocks dropped 4.6%. In mainland China, the blue-chip CSI300 Index fell 1.3% by the midday break, leaving it nearly 20% below its June peak. The Shanghai Composite Index declined 0.9%.

A decline of 20% or more from a recent peak is widely regarded as the threshold for a technical bear market.


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According to Reuters, investor sentiment has weakened amid disappointment over Beijing's limited stimulus measures and reduced expectations for additional policy support following stronger-than-expected third-quarter economic growth.

China's measures announced ahead of the National Day holiday, including mortgage interest subsidies for first-time buyers of lower-priced properties, fell short of market expectations, Kelly Chung, chief investment officer for multi-assets at Value Partners, said.

China's economy rebounded from a three-year growth low in the third quarter, supported by strong exports even as consumers remained cautious about spending. However, analysts have warned that the economy's increasing reliance on external demand is exacerbating structural imbalances.

The broader global selloff in artificial intelligence-related stocks also contributed to the weakness in Chinese equities.

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Leo Wang, a partner at Beijing-based Qianchuang Capital, said investors had concentrated their holdings in technology stocks during the first half of 2026, a trend reflected in mutual fund portfolios reported for the second quarter. This concentration contributed to excessive valuations in some sectors while diverting investment away from others, Reuters reported.

China's technology-heavy markets came under further pressure on Thursday. The ChiNext Composite Index tumbled 2.8%, while Shanghai's STAR50 Index, which tracks technology-focused companies, fell 1.6% by midday.

In Hong Kong, technology heavyweights led the broader market decline. Tencent Holdings fell 3.4%, while Alibaba plunged 6%.

Despite the sharp losses, some investors saw signs that the selling pressure could be nearing its end. Zeng Wenkai, chief investment officer at Hong Kong-based Shengqi Capital, said the rapid decline in major stocks such as Tencent could indicate that panic selling was approaching its final stage, although the market would need time to recover from the damage.

The latest losses highlight growing investor concerns over China's economic outlook, the effectiveness of government support measures and the sustainability of technology-sector valuations amid a broader reassessment of AI-related investments.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)