Latest tech stock decline highlights that investing in China and investing in the US are still different games ‘The US decline was primarily driven by earnings failures'[es] “There were market leader opinions from some market leaders, but in China it was mainly sentiment spillover and portfolio adjustment/rotation,” said Ding Wenjie, investment strategist for global capital investments at China Asset Management. “For the chip and AI sectors, the long-term drivers of both domestic substitutes and global AI computing demand remain intact,” he said, adding, “In addition to chips, China’s power and grid equipment companies and the materials sector will also continue to benefit from the AI capex cycle last week.” U.S. tech stocks tumbled, Chinese tech giants fell in Hong Kong trading, and sector indexes fell into a bear market. The biggest decliners over the past five trading days were short video and artificial intelligence video generation company Kuaishou, which fell about 11% over the same period, and Alibaba in Hong Kong, which fell more than 8%. But that hasn’t stopped mainland China-based investors from flooding into Tencent and Alibaba, according to Wind Information data available as of Friday afternoon. “The recent volatility in China’s tech sector, particularly the Hong Kong market, has a lot to do with sentiment spilling over from weakness on Wall Street,” Bryan said. “The Chinese market is basically just beginning a bull phase,” said Tikanko, an analyst at Stansbury Research. “Even in the AI and chip-related sectors, we haven’t seen an opportunity for valuation multiples to widen enough to warrant concern yet,” said Tikanko, noting that the KraneShares CSI China Internet ETF (KWEB) still trades at a price-to-earnings ratio of 16 times, while the mainland China innovation-focused KraneShares SSE STAR Market He noted that the 50 Index ETF (KSTR) is trading at a multiple of 45x. “Considering that the expected growth rate of China’s AI market is more than doubling every three years, it’s not that high,” Taikangko said.The top stocks in the STAR 50 index in the past five business days include semiconductor materials company SICC, vacuum robot company Roborock, AI industrial automation company Sapcon, and smartphone maker Transsion, which rose amid reports of possible new deals between China and Hong Kong. [stocks] We enter 2026 with low expectations. Singapore-based Raffles Family Office said in its 2026 investment outlook released last week that the valuation reflected considerable pessimism, saying: “Despite macro weakness, China’s digital economy and AI ecosystem continue to expand rapidly.” The private equity firm, which disclosed shares in Anthropic and SpaceX, said: “Earnings expectations, particularly in the technology sector, are stable and valuations are quite attractive relative to global peers.” “Against this dynamic, we remain constructive on global equities with continued preference for the US and selective opportunities in China/Hong Kong, where policy alignment and innovation trends are strong,” the report said. It showed that U.S. large-cap holdings were decreasing while exposure to Chinese and Hong Kong stocks increased. Investor concerns about US overvaluation of AI have been growing for months, but China’s AI developments highlight how local companies are using the technology, even as the Chinese government pushes to develop homegrown AI chips and infrastructure. Telecom operator Pony AI closed around 0.4% higher in Hong Kong trading on Friday after announcing a partnership with chipmaker Moore Threads to develop self-driving technology, which was listed on Shanghai’s Star board in December.
