Hong Kong Stocks Slide as AI Bubble Fears Ripple from Wall Street

The Hang Seng Index plunged as traders reacted to sharp declines in major U.S. AI stocks, where valuations have stretched beyond traditional metrics. The downturn underscored investor sensitivity to any hint of correction in AI-related names, which have powered global equity gains for much of 2025. In Hong Kong, losses were led by technology and semiconductor firms, mirroring Nasdaq’s slump overnight. Mainland shares tracked the move, with Shanghai and Shenzhen benchmarks dipping as investors weighed muted domestic demand and uncertainty over future stimulus.

Market participants cited a combination of factors driving the sell-off: profit-taking after a prolonged rally, caution over the sustainability of AI-driven gains, and anxiety about the global economic outlook amid continued trade tensions. While analysts described the pullback as “healthy,” some warned that elevated positioning in tech makes markets vulnerable to sharper corrections if investor sentiment sours further.

Despite the turbulence, strategists noted that underlying capital inflows into Hong Kong remain resilient, supported by expectations of policy support from Beijing and stable earnings from traditional sectors such as finance and property. Still, near-term volatility looks likely to persist as global investors reassess the sustainability of AI valuations and how closely Hong Kong’s market is tethered to Wall Street’s swings.