China and Hong Kong Stocks Tumble Amid Tech Sector Pressures and Investor Caution

China and Hong Kong stocks declined due to pressures in the tech sector, despite Nvidia's potential investment in OpenAI. A dip followed a sharp two-month rally as investors awaited new policy support. Key indices dropped, with Chinese financial regulators failing to offer new measures, impacting investor sentiment.

China and Hong Kong's stock markets faced a decline on Tuesday, driven by a downturn in the tech sector despite potential positive developments from Nvidia's investment intentions in OpenAI. Investors, preserving gains from a robust two-month surge, are now eagerly waiting for novel policy support to stabilize the markets.

The heavy-hitting CSI300 Index and Shanghai Composite Index both recorded a 1.2% decline, while Hong Kong's Hang Seng Index decreased by 1%. Furthermore, onshore artificial intelligence firm shares fell by 2.5% following a substantial rally earlier this year, and semiconductor stocks witnessed a 2.5% drop despite positive momentum and prior gains.

Investor sentiment soured after financial regulators' press conference failed to introduce new policies, according to UBS analysts. Existing strategies addressing local debt and consumption have had limited success. Meanwhile, China's central bank pledged monetary tools to ensure liquidity and economic recovery, though challenges persist in impactful policy implementation.

(With inputs from agencies.)