Chinese Tech Stocks Sell Off as Investors seek Potential Value Beyond Hype

Chinese stock markets took another thrashing on Thursday, led by technology stocks amid global fears about rising borrowing costs for companies turning to debt markets to finance ambitious, costly AI development.

The Shanghai Composite Index lost 1.6 percent to end at 3,707 on Thursday, while the Shenzhen Component Index tumbled 2.4 percent. The tech-focused ChiNext fell 2.9 percent in Shenzhen, and the Nasdaq-style STAR Market 50 index in Shanghai retreated 1.5 percent. More than 5,100 Class A shares fell.

Concerns about borrowing costs for companies relying on debt to fund AI development were rekindled by news that yields on corporate bonds issued by US cloud startup CoreWeave have surged to almost 15 percent, triggering a selloff in tech stocks on Wall Street. Meanwhile, hotter than expected inflation in the US raised general concerns about more interest-rate hikes, which raise borrowing costs for everyone.

"The sharp fall indicated fragile confidence among investors around the world, who require solid evidence of how AI can generate value instead of just hype," said Yang Chao, an analyst with Galaxy Securities.

Among losing stocks, ChangXin Memory Technologies (CXMT), China's top memory chipmaker, fell 5.2 percent. Alibaba was down 3.4 percent and Cambricon Technologies lost 3.4 percent.

In Asia, the chip-heavy Kospi in South Korea plunged 7.6 percent, racking up a nearly 20 percent loss in a week. Samsung Electronics tumbled 9 percent and SK Hynix slumped 11 percent. In Tokyo, the Nikkei fell 4.9 percent.