China and Hong Kong stocks fell as a Nasdaq-led tech rout rippled across Asia and fuelled fears the AI boom is losing steam, although bargain hunting helped pare losses in mainland markets buoyed by Beijing’s market-supporting measures. China’s blue-chip CSI300 Index dropped 1.5% by the midday break, but remained on track to snap a 12-week-long losing streak. The Shanghai Composite Index fell 1.1%.

The tech-heavy selloff was initially more severe. Both the tech-focused Star 50 Index and the AI Index slumped as much as 5% before recouping some losses. In Hong Kong, the benchmark Hang Seng Index was down 1%, while the Hang Seng Artificial Intelligence Index tumbled 4%.

Overnight, the Nasdaq posted its steepest one-day drop since April 2025, wiping trillions of dollars off market value as investors fretted that a Democratic sweep in the US midterm elections could bring tighter scrutiny of the AI sector. The risk-off mood spilled over to Asia in early hours, with South Korea’s KOSPI plunging more than 8% at one point and Japan’s Nikkei falling 5%.

Dong Baozhen, chairman of asset manager Lingtong Shengtai, said the overnight slump in US tech stocks meant the logic behind the AI-driven rally had crumbled. “The US stock market has been the standard-bearer and backbone of the global AI bull run. Now that backbone has snapped. Can AI bull markets elsewhere hold up on their own?” he said.

Chinese AI hardware stocks with significant exposure to the US market were among the hardest hit. Zhongji Innolight , which makes optical transceivers for data centres and generates most of its revenue in America, slumped 8% to a one-year low. Rival Eoptolink Technology tanked 7%. AI software firms also came under pressure, with Zhipu sinking as much as 15.4% amid concerns that a broader AI backlash could threaten the timing of Anthropic’s IPO.

Jason Hsu, founder and chairman of Rayliant Global Advisors, said China’s sentiment-driven stock market was heavily influenced by AI stock performance in the United States, as quoted by Reuters.

Technology stocks carry significant weight in China’s stock market and “what people are really watching closely is whether AI in the United States is a bubble,” he said, adding that any signs of a bubble bursting in the US “obviously will affect the Chinese market.”

Still, early panic selling drew in bargain hunters, helping trim losses in a market that remains on course for weekly gains after Beijing rolled out support measures and reiterated its commitment to preventing systemic risks. “I don’t think China can completely escape the fallout from Wall Street, especially with selling this aggressive,” said Pepperstone strategist Dilin Wu.

“But I’d be careful about treating China’s entire AI supply chain as one trade,” she said, adding growth in AI chip players like Huawei and Cambricon are mainly driven by China’s push for technological self-reliance. “When investors rush to cut risk, even good companies get sold.”