China stocks close down as AI selloff hammers chip supply chain

SHANGHAI, August 3 (Reuters) - China stocks ended lower on Monday as a global rout in artificial intelligence-related shares dragged down semiconductor stocks, while Hong Kong's internet platforms bucked the trend, led by a jump in Alibaba after it released its latest AI model.

• China's blue-chip CSI300 Index .CSI300 closed 1% lower, while the Shanghai Composite Index .SSEC lost 0.6%. Hong Kong benchmark Hang Seng .HSI was up 0.5%.

• The selling in AI-related stocks globally, with the chip-heavy Kospi index .KS11 down 20% last month in South Korea, has rocked markets and pushed investors to reassess the valuation of China semiconductor stocks.

• The tech-focused STAR50 Index .STAR50 fell 5.1%, while the CSI All Share Semiconductor Index .CSIH30184 dropped 6.9%. However, shares of newly listed memory chip giant CXMT 688825.SS rose 1.9% as its valuation still appears reasonable compared to other smaller players in the sector.

• "We believe that, under the broad assumption that the AI industry trend has not yet reached bubble territory nor come to an end, the recent pullback could actually improve the risk-reward profile of AI trades from a medium- to long-term perspective," analysts at CICC said in a note.

• "Therefore, even though most investors still view AI technology as the core investment theme, after such violent turbulence, a degree of portfolio rebalancing is likely a natural response for many," they said.

• Alibaba shares 9988.HK jumped 7% after it released what it said is its largest and most capable artificial-intelligence model, the Qwen3.8-Max.