Chinese Tech Stocks Enter Bear Market Amid Tax Fears, AI Concerns

• Hong Kong-listed Chinese technology stocks entered a bear market on Thursday, February 5, declining over 20% from their October peak.
• The Hang Seng Tech Index has fallen for six consecutive sessions, driven by investor fears of a potential increase in value-added tax (VAT) on internet services.
• Concerns about VAT hikes stem from a recent increase on telecom services, leading to speculation that online platforms and gaming could be next, despite officials dismissing gaming levy rumors.
• Global tech market volatility and fears that AI advancements could disrupt traditional software models also contributed to the sell-off.
• Despite the sharp decline, some investors view it as a healthy correction, with the fundamental outlook for Chinese tech stocks remaining positive due to supportive valuations and potential AI catalysts.