Day: February 25, 2025

CN20250225-Chinese Stocks Dip, But Mainland and Hong Kong Markets Rebound—A Surprising Turnaround

1. U.S. Tech Stocks Decline

Overnight, U.S. technology stocks saw a significant decline, with semiconductor and hardware sectors leading the losses. Broadcom dropped by 4.91%, Nvidia fell 3.19%, while Tesla and Meta declined 2.15% and 2.26%, respectively. Other major tech players, including Amazon and Microsoft, also experienced losses.

By market close, the Dow Jones Industrial Average remained steady, while the Nasdaq Composite Index, which heavily features tech stocks, dropped 1.21%, marking a 3.38% decline over two days.

2. Chinese Stocks in the U.S. Face a Sharp Drop

Chinese companies listed on U.S. stock exchanges were among the biggest losers, with the China Index falling 5.63% overnight. This comes after a strong rally in previous weeks—Alibaba’s U.S. stock, for instance, had surged nearly 80% recently before dropping over 10% in one night.

Given that many Chinese companies, like Alibaba, are dual-listed in the U.S. and Hong Kong, investors worried that this decline could negatively impact Hong Kong and mainland Chinese markets. As a result, market sentiment was cautious at the opening of Asian trading.

3. Hong Kong Tech Stocks Recover Losses Quickly

Despite early concerns, Hong Kong’s Hang Seng Tech Index made a strong recovery. Alibaba’s Hong Kong shares opened 7.81% lower, but by 11:30 AM, the decline narrowed to just 2.6%.

The Hang Seng Tech Index initially dropped 4.3% but fully recovered by midday and even turned positive. This shows the resilience of tech stocks in the region.

4. Mainland China’s Market Shows Strength

China’s stock markets also opened lower but quickly regained ground:

  • The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index opened down 0.81%, 1.34%, and 1.72%, respectively.
  • By midday, losses had narrowed to 0.14%, 0.29%, and 0.32%.
  • The STAR Market Index (focused on tech and innovation stocks), which initially dropped 1.57%, ended the morning session up 0.92%—showing strong momentum in the tech sector.

5. Market Sentiment Remains Resilient

Despite the initial concerns, the broader A-share market remained stable, with only 113 stocks out of 5,400 dropping more than 3% by midday.

Additionally, the total trading volume in the morning session was 1.14 trillion yuan, a decline of 280.1 billion yuan compared to the previous day. The lack of significant capital outflows suggests that investors were holding onto their positions rather than selling in panic.

If the market maintains this momentum in the afternoon session, it would further reinforce confidence in the resilience of Chinese equities.