Chinese Tech Stocks Get Brief Respite From Selloff, Outlook Murky

China's stock markets enjoyed a somewhat brief reprieve from the global selloff in technology shares on Friday, but that respite looks unlikely to last after the liquidation resumed on Wall Street overnight.

The benchmark Shanghai Composite Index edged up 0.2 percent on Friday, recovering from the fall of 1.6 percent a day earlier, but for the week, it lost 2.6 percent. The Shenzhen Component ended mostly flat on Friday, wrapping up the week with a loss of 6.6 percent. The tech-heavy ChiNext retreated 0.4 percent on Friday to extend its weekly decline to 8.9 percent.

In Hong Kong, the Hang Seng Index rose 0.5 percent on Friday but fell 0.1 percent for the week.

"The global markets this week are controlled by moving investor sentiment, from fears toward how artificial intelligence gets funded to worries about how the funds are spent," said Yang Chao, an analyst with Galaxy Securities. "Above all, people need to be convinced that tech shares are worthy of their investment and trust."

For most of the week, investors around the world turned dubious on the tech sector as the costs of debt to fund AI development continued to rise, compounded by the higher inflation in the US that triggered concerns about another interest rate rise this year.

In China, despite positive third-quarter earnings projections and multiple share buyback plans, tech companies remained under pressure. ChangXin Memory Technologies (CXMT), China's top memory chipmaker, tumbled 11.7 percent this week despite a 3.3 percent on Friday. Battery giant Contemporary Amperex Technology (CATL) and chip designer Cambricon Technologies both slumped 7 percent for the week, while Unitree Robotics dropped 1.2 percent, even after a 5.4 percent gain on Friday.

Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chipmaker and a supplier to Nvidia and Apple, fell 0.8 percent on Friday despite posting a ‌69 percent surge in third-quarter net profit a day earlier.

Around Asia, Japan's Nikkei concluded the week with a loss of 5.4 percent, and South Korea's Kospi plunged 14.5 percent for the week, with Samsung Electronics, the world's largest memory chipmaker, diving 17 percent.

On Wall Street, the selloff in tech stocks resumed, with the Nasdaq tumbling 2.1 percent on Friday, ending its worst week since May. The broader S&P 500 index shed 1.1 percent. Investor jitters have been fueled by higher oil prices and inflation, signs of surging borrowing costs for AI companies using debt to finance development and concerns about how fast Chinese advanced technology is catching up with the US. Those worries dragged the Nasdaq down 4 percent for the week and left the S&P 500 with a 2 percent loss. Michael Rosen, chief investment officer at the Angeles Equity Partners, told CNBC, "The question is: Is this a systemic issue? Obviously, increased debt issuance is something to be concerned about if it continues to get to levels of excessiveness."