Hang Seng posts worst week in over a year amid global tech selloff

Hong Kong's Hang Seng Index capped its worst week in more than a year on Friday as a global rout in technology stocks deepened, fueled by a hawkish Federal Reserve pivot and growing doubts over the pace of AI monetization.

The benchmark fell on Friday to close out a punishing week, with the Hang Seng Tech Index suffering steeper losses as heavyweights including Alibaba ↘ 0.53% slumped. The South China Morning Post reported the index briefly slipped below 23,000 points on Thursday for the first time in a year. Trading Economics data showed the HK50 fell to 22,686 points on Friday, losing 1.69% from the previous session.tradingeconomics+1

A Week of Cascading Tech Losses

The selloff began in earnest on Tuesday when technology and semiconductor shares came under heavy global selling pressure. South Korea's Kospi plunged 10% that day, led by Samsung Electronics and SK Hynix, both of which fell more than 12%. The selling spread to Wall Street, where chip stocks shed 7% for the week — their largest weekly decline since March, according to Reuters.reuters+2

Apple's ↗ 1.29% announcement of price hikes on AI-enabled devices stoked concerns about consumer demand and the sustainability of AI investment, Bloomberg reported on Friday. The ripple effects hit chipmakers and their Asian suppliers hardest.youtube

Fed Hawkishness Compounds Pressure

The Federal Reserve's June 17 decision to hold rates at 3.50%–3.75% while signaling a potential hike later this year rattled markets already stretched by rich AI valuations. Nine of 18 officials now project at least one rate increase by year-end, and the median dot-plot projection shifted from implying a cut to implying a hike — a reversal CNBC described as the committee's first hawkish surprise under new Chair Kevin Warsh.stocktitan+1

Markets are pricing roughly 60% odds of a September rate hike, Reuters reported Friday. Bank of America went further this week, telling clients it expects three consecutive 25-basis-point hikes starting in September.interactivebrokers+1

K-Shaped China Market Divergence

On the mainland, the CSI 300 fell sharply on Friday to 4,892.73 after gaining the previous session. CNBC noted that China's economy is experiencing a "K-shaped" divergence, with AI and high-tech sectors booming while traditional consumption and financial sectors falter. Alibaba's 4.4% plunge on Thursday after Anthropic accused it of extracting capabilities from its Claude model underscored the fragility of sentiment around Chinese tech firms' AI ambitions.investing+2

The week's losses mark the sharpest pullback since the tariff-induced rout of April 2025, leaving investors weighing whether the correction represents a healthy repricing or the start of a deeper unwind of leveraged AI bets across Asia.scmp