Staff reporter and Reuters

Hong Kong stocks returned to the 23,000 level yesterday after dipping below the psychologically important mark during a rough opening, with tech shares and geopolitical risks dragging the market down.

The benchmark Hang Seng Index closed 1.32 percent or 307 points lower at 23,034 points, after sliding 625 points at the open.

The market turnover was HK$329.6 billion.

The Hang Seng Tech Index fell by 1.57 percent to 5,698.8 points, after dropping as much as 4.3 percent in opening trade, with Alibaba (9988) slipping 3.8 percent and Baidu (9888) dropping 3.9 percent.

Shares of Tencent (0700) also declined 2.5 percent to HK$484.8.

Xiaomi (1810) once hit a high of HK$53.9 before closing up 3.1 percent at HK$53.2.

News that the Trump administration plans to tighten semiconductor curbs on China dampened sentiment, exacerbating geopolitical concerns following the "America First Investment Policy" which aims to step up restrictions on China.

The decline in Asia trading followed the overnight drop in US-listed Chinese stocks on Monday when the Nasdaq Golden Dragon China Index tumbled 5.2 percent in its worst single-day decline since October as profit-taking pressures ratcheted up.

"The market has been so obsessed with China's AI story like they've forgotten about Trump, but he's always a wild card," said Qi Wang, chief investment officer at UOB Kay Hian in Hong Kong.

The recent moves remind the market that Trump risk is still very real, he added.

"The rally has overshot; the market has run ahead of itself," he said.

The retreat this week marks a consolidation for China tech stocks' best winning streak since 2020, as strong earnings and optimism about artificial intelligence triggered a re-rating for the sector.

Hedge funds' willingness to boost bets on Asian stocks last week rose to its highest on record since 2016, according to Goldman Sachs, with China and Hong Kong attracting nearly half of Asia's inflows.

The conviction is still low over concerns about China's policy consistency and geopolitical tensions, according to Bank of America.

Semiconductor shares also declined, with Semiconductor Manufacturing International (0981) dropping 1.45 percent and Hua Hong Semiconductor (1347) sliding 6.51 percent.

Li Auto (2015), which released pictures of its first electric SUV i8, saw its shares surge 12.5 percent, making it the best-performing blue chip.

The HSI ended the day 307 points lower. SING TAO

HSI clings to 23,000 in rough ride