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

Shanghai and Hong Kong stocks slipped on Tuesday, trailing AI and technology shares, while energy stocks surged due to concerns over a potential Middle East conflict escalation. China's blue-chip CSI300 Index fell 0.8% by midday and the Shanghai Composite Index lost 0.4%. The Hong Kong benchmark Hang Seng Index decreased by 0.7%.

The CSI Artificial Intelligence Index declined 2.1%, and the 5G Communication Index dropped 1.8%. Hong Kong-listed tech giants experienced a 2% drop. Chinese memory chip manufacturer Changxin Technology slipped 3.7%, retracting some of its 12% surge on Monday that propelled the stock to a record high. Analysts at Huaan Securities anticipate the AI supply chain to further strengthen, with its impressive performance expected to be confirmed during the mid-August earnings season.

Despite the general market decline, oil and coal stocks rose amid stalled negotiations to end the US-Iran war and apprehensions of an imminent escalation, causing oil prices to climb. PetroChina's stock rose by more than 2%. Shares of onshore consumer staples companies edged up by 0.4%, even though China's economy showed slower growth at the beginning of the second half, as industrial output and retail sales declined due to extreme weather disruptions and persistently weak domestic demand, reigniting pressure on policy.

UBS analysts highlighted that several major consumer-sector firms are set to report earnings this week, and the results should be closely monitored for additional insights into demand trends. The Robot Industry Index climbed nearly 1%, with Leader Harmonious Drive Systems increasing by 5.5%, ahead of humanoid-robot giant Unitree's market debut on Wednesday.