Hong Kong Stocks See Downturn Amid Tech Rally Pause

Hong Kong stocks dipped as the tech rally driven by AI startup DeepSeek paused after Nvidia's earnings report. China’s stock indexes showed minor gains, with market analysts forecasting further improvements but emphasizing the need for stronger reforms and policy support amidst economic challenges.

On Thursday, Hong Kong stocks experienced a downturn as the tech rally, spurred by artificial intelligence startup DeepSeek, paused following Nvidia's earnings report. Despite a slight gain in China's stocks, the Hang Seng Index decreased by 0.3%.

An analyst in Hong Kong noted that the subdued hardware sentiment was due to Nvidia's earnings meeting expectations but not exceeding them. Nvidia's shares initially rose but fell in extended trading. The muted response dampened China's AI and chipmaker stocks, which declined by 2% and 0.7%, respectively.

Robin Xing, Morgan Stanley's chief China economist, highlighted the improving sentiment among tech sectors but cautioned that significant reforms are essential to address broader economic challenges. The forthcoming Two Sessions in Beijing are anticipated to address these issues, focusing on social welfare, debt restructuring, and business confidence.