The Hang Seng Tech Index reversed losses of as much as 4.4% on Tuesday amid further southbound buying from mainland investors as they rushed to buy the dip.

A decline in Chinese technology stocks after President Donald Trump moved to squeeze US investments into the Asian nation presents a buying opportunity, according to some traders.

The Hang Seng Tech Index reversed losses of as much as 4.4% on Tuesday amid further southbound buying from mainland investors as they rushed to buy the dip. 

While there are concerns over the Trump administration’s potentially tougher version of US semiconductor curbs, strategists have mainly remained bullish on the market. China’s artificial intelligence capital expenditure is still in expansionary mode, they said. 

Here’s what market watchers are saying.

Shengqi Asset Management (Zeng Wenkai)

• “This is without doubt a buying opportunity for southbound investors like us, especially as the drop in ADRs does not impact the changed narrative around China tech”
• “DeepSeek has led not just global investors, but our own investors to eye our capabilities in a new light, and the capex by Alibaba is still in its very early stages”
• China’s AI rally can be compared to the mid- to late-2023 rally for Nvidia so it has much more of the journey to go
• “I would be patient to wait for the figures on Ali Cloud for Q1 as a moment of truth for the trade, only when I see falsification then would I be cautious on the trade”

Shenzhen JM Capital (Zhuang Jiapeng) 

• “I sold some bullion yesterday to make funds to buy stocks, I think this is one of those times when it’s an obvious time to buy stocks without even having to do calculations”
• China’s AI capex is still in expansionary mode, and the valuations are still cheap, so “we will still be seeing higher highs and higher lows from here”
• “This is not the time to let go of positions in China tech, especially not as we’ve been holding on to them through all the tough times”
• This time is quite different from the September rally in that it’s more about institutional firms and the retail is still recovering from the bumpy experience in October — this means that any pullback will not be deep and may be quick to mend

Union Bancaire Privee (Linda Lam)

• “Alibaba’s slump reminds us that geopolitical risk as an overhang is not going away soon”
• However, DeepSeek does provide a solid long-term re-rating trigger for China tech companies despite US restrictions
• The next question on investors’ mind would be how much monetisation potential DeepSeek could bring

Daiwa Capital Markets (Patrick Pan)

• “The correction is in line with our expectations”
• “Relative strength index (RSI) is pointing to a severe overbought situation, investor positions are becoming crowded, while the valuation gap between Chinese stocks and US stocks has already disappeared after the tech re-rating”
• With the approaching Two Sessions, investor focus will shift
• If there are no big policy surprises, the market outlook in March will be dim, given that Trump administration is expected to complete tariffs reviews results on April 1

Maybank Securities (Kok Hoong Wong)

• “Some profit-taking is inevitable and perhaps can be considered healthy”
• In the near-term, with Trump tariff talk back on, and also the recent spate of measures targeting China, traders are probably taking this as a reason to take some profits
• Over the longer-term, for rest of the year at least, this theme is here to stay, I believe foreign funds will be buying on dips today

Saxo Markets Pte (Charu Chanana) 

• “Given the significant outperformance in AI-related Chinese stocks year-to-date, the uncertainties introduced by Trump’s executive order could lead to some profit-taking”
• If these orders were to go into effect, there is a risk that AI supply chains could be impacted
• If the orders are not imposed and used as leverage and bargaining power instead, the fundamental shift in AI momentum, with the right policy support, would remain the key market driver instead

Bank of East Asia (Jason Chan)

• The offshore market is starting to price in Trump’s anti-China policy, including potential tariff hike and investment ban towards Chinese high tech companies
• “Regarding the latest memo, I do not think it would bring too much actual impact to the US fund flows buying Chinese listed companies, since the memo mainly target on direct investment restrictions instead of banning US funds to invest in Chinese equities”
• The main drag on the index today is negative sentiment concerning the future tightening of investment restrictions