By the close, China’s blue-chip CSI300 Index was down 0.3%, while the Shanghai Composite Index traded 0.2% lower.

Hong Kong’s Hang Seng Index lost 0.95%.

Some AI-related stocks led the losses. In Hong Kong, large language model upstarts Knowledge Atlas and Minimax retreated 13% and 4%, respectively.

Hong Kong-listed Chinese internet majors fell 2.3%. The sub-sector is down more than 12% so far this year.

In mainland A-shares, cloud computing and software sectors led the decline, while semiconductors closed slightly higher.

Analysts said investors are taking a wait-and-see approach as they digest a flurry of first-quarter (Q1) earnings by Chinese tech companies, as well as taking light positions ahead of the five-day Labour Day holiday starting on May 1.

Market focus has shifted from recovery of liquidity to earnings, Nanhua Futures said in a note.

“China’s AI adoption has yet to lead to meaningful impact on jobs or earnings,” BofA Securities said in a note today.

“It explains why China’s tech rally lags its peers in Asia and the US,” they added.

On the policy front, China’s top leadership indicated today that they will keep the market liquidity sufficient as they reiterated China’s “proactive” fiscal stance and “appropriately loose” monetary policy.

Also weighing on sentiment is China ordering US tech major Meta to unwind its acquisition of AI startup Manus, raising concerns over Beijing’s tighter control over Chinese AI talent and technology.

Hong Kong shares of electric vehicle battery major CATL lost 6.9% after the firm completed a share placement today to raise US$5 billion.

The shares ​were sold at a 7% discount to Monday’s closing price.