Tech Sector Leads Losses as Hong Kong Stocks Slide

Hang Seng drops 2.35%, hitting its lowest level in nearly two weeks, while the tech index plunges 3.8%.

Hong Kong’s stock market tumbled on Tuesday (25), led by sharp losses in the technology sector, as investor sentiment took a hit following Xiaomi’s planned share sale, sparking concerns over inflated valuations.

At the close, the Hang Seng Index fell 2.35%, marking its lowest level in nearly two weeks. The Hang Seng Tech Index saw an even steeper decline of 3.8%, reaching its weakest point since March 4.

Xiaomi Sparks Sell-Off, EV Makers Under Pressure

Shares of Xiaomi plummeted 6.3%, the biggest drop since October, after the company announced plans to raise up to $5.27 billion through a share offering. The move reignited fears that more firms might follow suit, leading to broader market weakness.

Among electric vehicle stocks, Xpeng slumped 7.5%, while Li Auto declined 4.9%, reflecting concerns that recent market rallies may have pushed valuations too high.

"The Xiaomi share placement serves as a reminder that some companies may be overvalued following the recent rally. Markets are now wary that others may take advantage of high valuations to offload shares," said Kenny Ng Lai-yin, a strategist at China Everbright Securities International.

Mainland China Markets Hold Steady

While Hong Kong faced significant losses, mainland China’s markets showed resilience. The Shanghai Composite Index ended flat, while the CSI 300 Index, which tracks the largest stocks listed in Shanghai and Shenzhen, dipped only 0.06%.

With ongoing volatility in tech stocks and uncertainty surrounding further corporate share placements, investors remain cautious about the near-term outlook for Hong Kong’s market.