China and Hong Kong stocks edged lower on Tuesday, surrendering early gains as technology shares resumed their decline. Faster growth in industrial profits failed to improve investor sentiment, Reuters reported.
By the midday break, the Shanghai Composite Index had fallen 0.1% to 3,692.58 points, while the blue-chip CSI300 Index was also down 0.1%.
Technology stocks led the declines, with the ChiNext Composite Index, which tracks growth-oriented companies, slipping 0.5%. Shanghai's technology-focused STAR50 Index fell 1.5%.
Read more: Who are the biggest investors backing Anthropic? A look at key stakeholders
The selloff in China's artificial intelligence-related stocks continued, with the CSI Semiconductor Index dropping 2.2% to a fresh six-month low. The CSI AI Index declined 0.8%, reflecting persistent weakness in the sector, Reuters reported.
In contrast, defensive stocks attracted some buying interest. The CSI Banks Index rose 0.8%, suggesting investors remained cautious amid continued volatility in technology shares.
In Hong Kong, the benchmark Hang Seng Index slipped 0.1%, while the Hang Seng Tech Index fell 0.8%.
Market analysts cautioned that a near-term rebound could follow the recent selloff, but a sustained recovery may require further reductions in leveraged positions and crowded trades, Reuters reported, citing analysts at Sinolink Securities.
Meanwhile, China's central bank announced on Monday that it had decided to establish a swap facility to provide emergency liquidity to non-bank financial institutions facing large-scale redemptions.
Read more: Global Market: South Korean shares jump over 4% as AI chip rally lifts Samsung, SK Hynix
The move could help ease short-term liquidity pressures and support market stability. Analysts at Huajin Securities said the facility could keep short-term liquidity conditions accommodative as authorities seek to address redemption-related stress at non-bank financial institutions, according to Reuters.
Separately, data released on Tuesday showed that China's industrial profits grew at a faster pace in September, although the recovery remained uneven across sectors.
The improvement offered limited support to equity markets as investors continued to assess the outlook for corporate earnings and the sustainability of the technology sector's growth.
Asian markets gain on AI optimism
Elsewhere, Asian stocks climbed on Tuesday, tracking gains on Wall Street after artificial intelligence company Anthropic's highly anticipated initial public offering filing boosted risk appetite.
Investors were also looking ahead to upcoming technology earnings, expected to provide fresh clues about demand for artificial intelligence and the sustainability of spending on AI infrastructure.
Central bank meetings were another key focus, with policymakers' decisions expected to influence the near-term outlook for interest rates and global financial markets.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)
