Hong Kong tech stocks decline as US bond rout, Iran war stalemate dent sentiment
Tech stocks sink as US bonds sell off on supply jitters, while China’s debt market diverges on sluggish data, spurring easing hopes
The Hang Seng Tech Index slumped 1.2 per cent at the close, with Baidu leading the declines after reporting weaker revenue. On the mainland, the Star Market 50 index – predominantly chipmakers trading in Shanghai – tumbled 6.9 per cent, while the ChiNext gauge dominated by artificial intelligence hardware firms on the Shenzhen exchange plunged 6.3 per cent.
Benchmarks were mixed, with the Hang Seng Index edging up 0.1 per cent to 25,495.07 and the CSI 300 Index of yuan-traded stocks sliding 2.9 per cent.
The bond market took centre stage as supply concerns sent longer-dated US Treasury yields surging across the curve after the Trump administration accelerated issuance to finance fiscal deficits and hyperscalers ramped up debt sales to fund AI infrastructure buildouts.
Higher capital costs pressured tech stocks already trading at stretched valuations, adding to jitters over inflation after oil prices rebounded amid the diplomatic stalemate over the US-Israel war on Iran.
“The upwards trajectory of long-term rates is more important than whether central banks around the world are going to cut or hike 25 basis points [0.25 percentage points]. The global bond market is sending us a strong signal – the cost of capital has moved structurally higher,” said David Chao, a strategist at US asset-management firm Invesco.
“Higher yields certainly create a valuation headwind for mega-cap tech stocks because they are more sensitive to discount rates and reduce the justification for extreme valuation multiples.”