China, HK stocks end lower on losses in tech shares

China and Hong Kong stocks ended lower on Tuesday, weighed by technology shares as investors locked in profits following a sharp rally in AI-related names and ahead of Chinese President Xi Jinping's speech on Wednesday.

** China's blue-chip CSI300 Index 3399300 declined 0.7%, while the Shanghai Composite Index 000001 lost 0.5%. Hong Kong benchmark Hang Seng HSI shed 0.5%.

** Tech shares have been a key driving force behind China's bull run this year, with tech-focused STAR50 index 0000688 jumping 34% so far.

** Despite the sharp gains, tech valuations remain relatively contained, said analysts at Dongxing Securities.

** "A moderate degree of bubble may be necessary to spur innovation, with China's focus on artificial intelligence as a core driver of industrial development seen as a clear strategic direction," they said.

** Meanwhile, China's outstanding margin financing touched a record high of 2.29 trillion yuan ($320.15 billion), surpassing the previous peak set a decade ago, as investors ramped up leveraged bets to chase the stock market rally.

** The start-up board ChiNext Composite Index 3399006 declined 2.8%. The index had advanced 15% over the past month.

** Shares of Chinese chip firm Cambricon Technologies 688256, which had doubled since the end of July, rose 2.2%.

** Tech majors in Hong Kong HHSTECH dipped 1.2%.

** While China is still catching up on software applications, optimism is rising thanks to a growing talent pool and rapidly evolving downstream AI models, panelists said at a UBS A-share conference on Monday.

** Investors are now focussed on the military parade on Wednesday, which President Xi is scheduled to address.

** The CSI Defense Index 3399973 fell 2.3%.

($1 = 7.1529 Chinese yuan renminbi)