Reviewed by Gotrade Internal Analyst
Gotrade News - China's tech sector has officially entered bear market territory after the Hang Seng Tech Index took a nosedive Thursday (02/05). This drop smashed through the 20% threshold from its October peak and rattled investors.
Massive selling pressure is being fueled by market jitters over potential new taxes on internet services. You now have to decide if these cheap valuations are a value trap or a prime buying opportunity.
Key Takeaways
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China tech index slid over 20% on tax rumors and global sentiment.
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AI disruption fears are spooking software investors in Hong Kong.
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Analysts see this as a healthy correction with solid fundamentals.
Market players are reacting negatively to speculation about a Value-Added Tax (VAT) hike on internet services. Qi Wang from UOB Kay Hian notes this anxiety follows a recent tax increase on telecom services.
Negative sentiment is also stemming from global fears that AI is about to disrupt software categories across the board. Phelix Lee from Morningstar calls this situation a barrage of negative news hitting market confidence.
Tension between Nvidia and OpenAI is creating risk-off vibes in the hardware AI trade. Reports of Anthropic’s legal automation plugin are also triggering panic in the global legaltech sector.
Sharp drops in giants like Alibaba are viewed by some institutions as a rational correction. Lorraine Tan from Morningstar believes the weakness is concentrated in sectors that previously overshot their fair value.
The fundamental outlook for China tech remains largely unchanged despite the lack of short-term catalysts. Vey-Sern Ling from Union Bancaire Privée says current valuations are still very supportive of a potential rebound.
This high volatility in the Chinese market actually opens up two-way profit opportunities for smart traders. You don't need to guess the market direction because Options strategies allow for gains whether prices go up or down.
Capitalize on this aggressive movement by trading Options on the iShares China Large-Cap ETF (FXI) right now. Capture potential maximum profit from China's market volatility without waiting for the bulls to return.
That’s the market update worth watching today. Follow Gotrade News for timely coverage on US stocks, ETFs, and macro moves that shape market direction. For a structured starter guide, visit the Gotrade Blog to learn the basics and build your plan.
If you want to act on this news, track price moves and review your portfolio in the Gotrade app. You can start investing in US stocks and ETFs with $1, then align your next steps with your goals and risk profile. Download and open the Gotrade app now!
Reference:
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The Tech Buzz, China Tech Stocks Plunge 20% Into Bear Territory on Tax Fears. Diakses pada 5 Februari 2026
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CNBC, China’s Hong Kong-listed tech stocks enter bear market as tax and AI fears take hold. Diakses pada 5 Februari 2026
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