Hong Kong stocks sank in afternoon trade ​on Thursday, dragged down by the unwinding of the global artificial intelligence trade and the lack of stimulus to provide a driver ahead of a crucial earnings season.

The Hang Seng Index dropped 3.1%, while the Hang Seng Technology Index fell 5%.

As for the star stocks, Lenovo fell 11%; Z.AI fell 9%; CATL, MiniMax, and NetEase fell 7%; Alibaba and SMIC fell 6%; Li Auto, Meituan, and JD.com fell 5%; BYD, Kuaishou, XPeng, Bilibili, Xiaomi, and Tencent fell 4%; Baidu and Pop Mart fell 3%.

Chinese firms have emerged as among the biggest losers of the faltering global AI trade as scrutiny over future demand and earnings prospects intensifies. The Nasdaq-style Star50 Index has tumbled about 40% in the current half year, while the ChiNext index, which also focuses on hardware stocks, has declined by a similar measure.

Mixed results from US megacaps have cast doubt on the durability of the AI rally as investors grow more discerning over valuations amid rising borrowing costs. In China, early optimism over technological breakthroughs and strong state support drove valuations to lofty levels, leaving the sector more vulnerable as sentiment turns.