China, Hong Kong stocks slip as Alibaba sinks on share sale

Business Recorder reported that Chinese and Hong Kong shares retreated on Monday after Alibaba's unexpected share placement revived worries about the returns from heavy AI spending. The Shanghai Composite Index eased 0.7 per cent to 3,877.3 points, while the CSI 300 Index dropped 1.3 per cent. Technology stocks led the losses, with the ChiNext Composite Index down 3.5 per cent and the STAR50 Index lower by 3.26 per cent.

Declines extended to AI and chip-related benchmarks, with the CSI AI Index sliding 4.7 per cent and the CSI Semiconductor Index losing more than 2 per cent. In Hong Kong, the Hang Seng Index shed 2.1 per cent and the Hang Seng Tech Index fell 3.8 per cent. The city's AI sector index tumbled by more than 5 per cent.

Alibaba's stock dropped by as much as 10.5 per cent, touching a one-month low, after the company announced an HK$80 billion ($10.2 billion) placement priced 8.4 per cent below Friday's close. The deal is the largest primary follow-on offering in the city's history, and the funds are intended for AI-related development. Jason Chan, a strategist at Bank of East Asia, described the size and discount as a surprise to the market and said the new shares will add dilution pressure. Elsewhere in the region, oil prices eased and share markets stayed cautious while investors awaited details of the US sanctions threat against Iran.