China, HK stocks weakened as tech shares pace decline

China and Hong Kong shares weakened on Tuesday as tech stocks led a broad selloff, with Xiaomi's planned share sale triggering concerns about stretched valuations across the market.

** As of the midday trading break, China's blue-chip CSI300 index 3399300 and the Shanghai Composite index 000001 were both down around 0.2%.

** The tech sector paced decline, with the chip sector (.CSI931865) weakening 1.1% and AI industry 9930713 losing 1.8%.

** Hong Kong's benchmark Hang Seng Index HSI declined 2.2%, and the Hang Seng Tech Index HHSTECH lost 3.5%.

** "Shares of Xiaomi 1810 slid 5.4%, heading for their biggest decline in a month, after the company announced plans to raise up to $5.27 billion from a share sale.

** Peer Xpeng XPEV tumbled 6.3%, and BYD 002594 weakened 3.4%.

** "Xiaomi's share placement serves as a reminder to investors that some companies may have hit high valuations following the recent rally. The markets are concerned that other companies might do the same and sell their shares," said Kenny Ng Lai-yin, securities strategist at China Everbright Securities International.

** Still the placement could be only an "excuse" for the market decline in general after this round of a 6,000-point rally, said Steven Leung, director of institutional sales at UOB Kay Hian in Hong Kong.

"Investors tend to take profit towards quarter end, especially as earnings and the National People's Congress (NPC) policies have largely been discounted," Leung said, referring to muted market reaction to earnings from Tencent and Xiaomi last week.