Chinese Stocks BABA, JD, PDD Slide After Hong Kong Tech Index Falls Below 4,000, Even As US Market Edges Higher

• The drop in the Hang Seng Tech Index on Wednesday comes after the index had already touched a two-year low in the previous session.
• Meanwhile, U.S. technology stocks advanced amid renewed interest in artificial intelligence and developments involving SpaceX, Tesla and Nvidia.
• The KraneShares China Internet ETF was also in the red on Wednesday.

U.S.-listed Chinese internet stocks including Alibaba (BABA), JD.com (JD) and PDD Holdings (PDD) fell Wednesday even as the S&P 500 and Nasdaq rose after the Hong Kong-based Hang Seng Tech Index hit its lowest level since October 2024.

BABA stock dropped around 3.6% in midday trade and was among the top trending tickers on Stocktwits at the time of writing. On Stocktwits, retail sentiment around Alibaba jumped to ‘bullish’ from ‘bearish’ territory over the past day. 

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JD stock was also among the top trending tickers on Stocktwits, down around 3.8% in midday trade. Retail sentiment around the shares continued to trend in ‘bullish’ territory over the past day.

Meanwhile, PDD stock fell around 3.5% with retail sentiment rising to ‘bullish’ from the ‘neutral’ zone over the past day.

The Hang Seng Index closed 0.9% lower on Wednesday at 23,651.87. The Hang Seng Tech Index fell 1.26% to 3,994.77, below the 4,000 mark and its lowest level since October 2024. The drop comes after the index had already touched a two-year low on Tuesday. 

Chinese Internet Stocks Lag Broader US Stock Market

The KraneShares China Internet ETF (KWEB) lost about 2.5%, while SPDR S&P 500 ETF Trust (SPY) edged 0.5% higher and the tech-heavy Nasdaq-100 tracking Invesco QQQ Trust Series 1 (QQQ) gained as much a 1.25%. 

U.S. technology stocks advanced amid renewed interest in artificial intelligence and developments involving SpaceX and Tesla (TSLA). SPCX stock maintained gains of around 8% in midday trade, after surging as much as 10% earlier in the day, after the company reported that revenue grew 161% in the third quarter (Q3). 

Elon Musk also said SpaceX and Tesla had formed special committees to discuss a potential merger. Tesla (TSLA) shares were also in the green, rising more than 3% ahead of the electric vehicle maker’s earnings report after market close on Wednesday.

AI Trade Turns Green

Nvidia (NVDA) hosted its GTC event in Berlin earlier today, which added to investor interest in the AI trade. Advanced Micro Devices (AMD) gained about 3%, while Micron Technology (MU) and Marvell Technology (MRVL) each advanced about 2%. The VanEck Semiconductor ETF (SMH) gained nearly 1%.

Investors were also looking ahead to earnings from Meta Platforms (META), which was scheduled to report after the closing bell Wednesday. Earlier this month, Meta introduced its latest AI model, Muse Wonder, which is available only to paying users.

META stock traded nearly 2% higher in midday trade, with retail sentiment on Stocktwits flipping to ‘bullish’ from ‘bearish’ territory over the past day.

IBM (IBM) and Southwest Airlines (LUV) are also due to report results Wednesday. IBM stock rose around 1.3% on Wednesday, while LUV stock gained around 2.6%. On Stocktwits, retail sentiment around IBM improved to ‘neutral’ from ‘bearish’ territory over the past day while sentiment around LUV continued to trend in the ‘bullish’ zone.

Rates And China’s AI Spending Remain In Focus

Interest rates and China’s technology spending remained key considerations for investors. The 10-year U.S. Treasury yield was near 5.1% on Wednesday. The U.S. Federal Reserve hike rates in September, and so did Hong Kong’s monetary authority. However, China left its benchmark lending rates unchanged on Tuesday.

Alibaba’s AI spending is another focus for investors after the company reported a 75% decline in profit for the June quarter. Alibaba, along with ByteDance and Tencent have reportedly ordered more than 3 million Nvidia RTX PRO 5500 graphics cards, with a combined list price exceeding $35 billion. However, Nvidia may be able to supply only a fraction of the orders.

Read also: Nvidia GTC Berlin Keynote: Jensen Huang Puts $50 Billion Price Tag On 1GW AI Factory Amid DSX POD Launch

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