China Shares Slide as AI Selloff Deepens, Hawkish Fed Signals Weigh; Hubei Zhenhua Down 10%
Chinese shares closed lower on Thursday as the global rally of artificial intelligence stocks cools and amid hawkish signals from the U.S. Federal Reserve.The Shanghai Composite Index, the main gauge of Chinese stocks, closed 0.6% lower to 3,804.69. The Shenzhen Component Index fell 2.7% to 13,285.80.The SSE STAR 50 Index (SHA:000688), the benchmark for the 50 largest science and technology companies on the Shanghai bourse, dropped 5.4% at market close.China's market moves mirror a broader cooling in the global AI rally, which has lost momentum in recent weeks, Bloomberg News reported. Beyond lofty valuations, investors are increasingly concerned about intensifying competition, questionable cross-investment deals and signs that companies may be overspending on AI infrastructure.The decline in Chinese chip stocks appears to be a structural rotation, with capital flowing into consumer, property and high-dividend shares, the report cited Xiang Xiaotian, director at Shanghai Chengzhou Investment Management. He added that the selloff also reflects a global unwinding of AI trades, as investors cash in years of gains and pare leveraged positions.Also weighing down sentiment is the growing division within the Fed on maintaining the target range for the federal funds rate at 3.5% to 3.75%, with the presidents of the Cleveland, Minneapolis and Dallas regional Fed banks advocating for a 25-basis-point rate hike.In company news, Hubei Zhenhua Chemical (SHA:603067) on Thursday opened subscriptions for its 878-million-yuan convertible bond offering. Shares of the chemical company closed 10% lower Thursday.
