China and Hong Kong stocks drop as markets struggle for direction

China ​and Hong Kong stocks fell on Tuesday ​as the artificial intelligence-led rally took a ‌breather, ​leaving investors scouring for fresh catalysts to sustain the upward momentum.

China ​and Hong Kong stocks fell on Tuesday ​as the artificial intelligence-led rally took a ‌breather, ​leaving investors scouring for fresh catalysts to sustain the upward momentum. ** By the close, China's blue-chip CSI300 Index was down 0.3%, while the ‌Shanghai Composite Index traded 0.2% lower.

** Hong Kong's Hang Seng Index lost 0.95%. ** Some AI-related stocks led the losses. In Hong Kong, large language model upstarts Knowledge Atlas and Minimax retreated 13% and 4%, ‌respectively.

** Hong Kong-listed Chinese internet majors fell 2.3%. The sub-sector is down more than 12% so ‌far this year. ** In mainland A-shares, cloud computing and software sectors led the decline, while semiconductors closed slightly higher.

** Analysts said investors are taking a wait-and-see approach as they digest a flurry of first-quarter earnings by Chinese tech companies, as ⁠well as ​taking light positions ahead of ⁠the five-day Labour Day holiday starting on May 1. ** Market focus has shifted from recovery of liquidity to earnings, ⁠Nanhua Futures said in a note.

** "China's AI adoption has yet to lead to meaningful impact on jobs or ​earnings," BofA Securities said in a note on Tuesday. It explains why China's tech rally ⁠lags its peers in Asia and the U.S., they added. ** On the policy front, China's top leadership on Tuesday indicated ⁠that ​they will keep the market liquidity sufficient as they reiterated China's "proactive" fiscal stance and "appropriately loose" monetary policy.

** Also weighing on sentiment is China ordering U.S. tech major Meta to unwind its ⁠acquisition of AI startup Manus, raising concerns over Beijing's tighter control over Chinese AI talent and technology. ** ⁠Hong Kong shares of ⁠electric vehicle battery major CATL lost 6.9% after the firm completed a share placement on Tuesday to raise $5 billion. The shares were sold at a ‌7% discount to ‌Monday's closing price.