Chinese equity markets opened lower on 11 February, with the Shanghai Composite down about 0.10%, the Shenzhen Component off roughly 0.17% and the ChiNext small‑cap index slipping 0.24% at the opening bell. Sector leadership for the decline was uneven: crude palm oil (CPO) related names and commodity-linked agricultural stocks fell alongside heavy selling in chipmakers exposed to data‑centre and AI computing demand, while firms tied to high‑bandwidth memory (HBM) registered some of the steepest losses.
The sell‑off in compute‑related chips and HBM is a reminder of how much the market’s recent optimism has hinged on an assumed, rapid build‑out of generative‑AI infrastructure. HBM chips are a niche but crucial component for accelerated computing; when investors reassess timing or scale of data‑centre purchases, shares of companies in that supply chain become highly volatile. The pullback appears driven more by profit‑taking and rotation than by a change in the long‑term thesis that AI will boost semi demand, but the correction exposes how concentrated investor expectations have become.
CPO’s slide — and the broader weakness in agricultural commodity names — points to a different dynamic. Prices for vegetable oils have oscillated with changes in global supply expectations, shipping costs and demand forecasts from large importers. For Chinese traders, who often use futures and packaged stocks as proxies for these asset classes, any repositioning abroad or seasonal demand shifts domestically can quickly translate into falling sector indices.
Globally, equity markets displayed mixed signals. South Korea’s SK Hynix opened lower and the KOSPI showed modest intraday gains later on, while major European bourses traded in a narrow range. The disparate performance underlines a patchwork of influences — from microchip inventory cycles to regional macro measures — rather than a single, systemic shock. Thin liquidity ahead of the Lunar New Year and a calendar punctuated by holidays across Asian markets may be amplifying moves.
For investors and policymakers, the immediate implication is caution. Volatility concentrated in AI supply chains could delay some capital expenditures if companies decide to recalibrate procurement schedules in response to price swings or revised demand forecasts. For portfolio managers, the episode reinforces the need to differentiate between structural winners in AI and short‑term leveraged plays that depend on near‑term deployment surges.
Markets may stabilise once trading resumes at full capacity after the holidays and clearer signals on global demand and inventory emerge. In the medium term, underlying secular demand for data‑centre capacity and for broad commodity cycles will determine whether this episode is a routine correction or the start of a more sustained revaluation in high‑growth technology and agro‑commodity sectors.