China and Hong Kong stocks slipped on Tuesday, weighed down by technology shares, as investors locked in profits following a sharp rally in artificial intelligence-related names and turned their focus to the country’s largest-ever military parade.
** China’s blue-chip CSI300 Index 3399300 dropped 0.9% by the lunch break, while the Shanghai Composite Index 000001 lost 0.8%. Hong Kong benchmark Hang Seng 
HSI shed 0.6%.
** Tech shares have been a key driving force behind China’s bull run this year, with tech-focused STAR50 index 0000688 jumping 40% so far this year.
** Despite the recent sharp gains in tech shares, valuations remain relatively contained, said analysts at Dongxing Securities.
** “A moderate degree of bubble may be necessary to spur innovation, with China’s focus on artificial intelligence as a core driver of industrial development seen as a clear strategic direction,” they said.
** Meanwhile, China’s outstanding margin financing touched a new record high of 2.29 trillion yuan ($320.15 billion), surpassing the previous peak set a decade ago, as investors ramped up leveraged bets to chase the stock market rally.
** The start-up board ChiNext Composite Index 3399006 declined 3.2%. The index has advanced nearly 40% so far this year.
** Shares of Chinese chip firm Cambricon Technologies 
688256, which have doubled since the end of July, were roughly flat.
** Tech majors in Hong Kong HHSTECH dipped 1.8%.
** While China is still catching up on software applications, optimism is rising thanks to a growing talent pool and rapidly evolving downstream AI models, panelists said at a UBS A-share conference.
** Investors are now focussed on the military parade on Wednesday, which President Xi Jinping is scheduled to address.
** The CSI Defense Index 3399973 fell 3%.
($1 = 7.1529 Chinese yuan renminbi)
