China, HK stocks slip as AI shares retreat, energy bucks trend

Chinese and Hong Kong equities experienced a decline on Tuesday, influenced by a drop in AI and technology stocks. However, energy shares experienced an increase as concerns about a potential Middle East conflict escalated. The China's blue-chip CSI300 Index fell by 0.8% by midday, while the Shanghai Composite Index dropped by 0.4%.

The Hong Kong benchmark Hang Seng Index declined by 0.7%. The AI-specific CSI Artificial Intelligence Index saw a significant 2.1% decrease, and the 5G Communication Index dropped by 1.8%. The tech giants listed in Hong Kong declined by 2%. Chinese memory chip maker Changxin Technology witnessed a 3.7% decline, reversing some of the 12% surge it had seen the previous day, which had pushed the stock to an all-time high.

Analysts at Huaan Securities anticipate the AI supply chain to maintain its upward momentum, with the strong performance likely to be reinforced during the mid-August earnings season. Despite the overall decline in the market, oil and coal stocks moved higher due to stalled negotiations to end the US-Iran war and fears of an imminent escalation, which led to an increase in oil prices.

PetroChina's stock rose by over 2%. Onshore consumer staples shares rose by 0.4%, even though data revealed a slowdown in China's economy at the beginning of the second half of the year. Industrial output and retail sales were both found to be weakening, as extreme weather disruptions and persistent weak domestic demand add pressure on policy.

As several major consumer-sector firms are set to report earnings this week, the results will need to be closely monitored for further insights into demand trends, according to UBS analysts. The Robot Industry Index surged nearly 1%, with Leader Harmonious Drive Systems rising by 5.5%, ahead of the market debut of humanoid-robot giant Unitree on Wednesday.