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Hong Kong stock market
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Hong Kong stocks edge lower as investors weigh AI-driven gains

Investors sway between optimism that massive AI investments will sustain earnings and concerns about whether elevated valuations will hold

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The lofty valuation of Palantir is worrying investors. Photo: Reuters
Zhang Shidongin ShanghaiandYulu Aoin Hong Kong
Hong Kong stocks on Tuesday extended a loss following a summit that de-escalated China-US tensions as the market reassessed earlier optimism and grew wary of frothy valuations of artificial intelligence-linked shares.
The Hang Seng Index fell 0.8 per cent to 25,952.40 at the close, taking the decline to 1.5 per cent since a meeting between Chinese President Xi Jinping and US leader Donald Trump last week. Trading was choppy, with the benchmark wiping out a 0.5 per cent gain on the day triggered by Amazon’s US$38 billion partnership with OpenAI.

The Hang Seng Tech Index fell 1.8 per cent. On the mainland, the CSI 300 Index slid 0.7 per cent and the Shanghai Composite Index shed 0.4 per cent.

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Gold producer Zijin Mining Group slumped 5.4 per cent to HK$30.02 as an unwinding of haven trade sent bullion prices tumbling from a record high. Electric-vehicle maker Li Auto tumbled 3.9 per cent to HK$77.75. Alibaba Group Holding fell 2.6 per cent to HK$159 and peer JD.com retreated 2.4 per cent to HK$99.90. Baidu surged 2.9 per cent to HK$121.90 on a media report that the search-engine operator would roll out new products featuring AI technology next week.

Investors started to lock in profits from a market that had priced to perfection a detente in China-US relations. The results from the summit largely fell within a preliminary agreement reached by negotiators days earlier. Despite that, investment banks including Nomura Holdings said frictions between the world’s two largest economies would be a recurrent theme in the future.
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“The results have been fully anticipated by investors,” said Cliff Zhao, a strategist at CCB International in Hong Kong. “Market sentiment calls for a policy catalyst or an improvement in corporate earnings. Otherwise, the Hang Seng Index will hover around 26,000 in the near term.”

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