China stocks see biggest daily slump since November's reopening rally

SHANGHAI, April 21 (Reuters) -

China stocks slumped on Friday, logging the biggest daily decline since last November's

rally

driven by optimism over easing of COVID restrictions, as uneven Chinese economic recovery dented investor sentiment.

Shares of artificial intelligence (AI) and tech companies led Friday's decline, after frenzy around Chinese equivalents of OpenAI's ChatGPT chatbot fuelled speculative bets and boosted shares in recent months.

** China's blue-chip CSI300 Index and the Shanghai Composite Index both closed down 2%, while Hong Kong's benchmark Hang Seng Index finished 1.6% lower.

** For the week, the CSI300 Index declined 1.5%, while the Hang Seng Index lost 1.8%, both finishing the week at their lowest levels in April.

** Shares in both artificial intelligence, and semiconductors slumped more than 6% to lead the decline, and media firms tumbled 4.6%.

** UBS wrote in a note that valuation in China technology, media, and telecom (TMT) stocks is at extreme levels and first quarter results did not show fundamental support.

** Meanwhile, broad sentiment remained subdued as market participants closely monitored the progress of China's economic recovery.

** "Investor sentiment edged down as debate over the sustainability of fundamental recovery continues despite the strong macro data," said Morgan Stanley analysts, suggesting investors to watch May Golden Week data.

** Despite raising full-year China growth forecast to 5.9% from 5.3%, Nomura's chief China economist Ting Lu said in a note that they remain cautious on the second half of 2023 and 2024, when the sweet spot of post-pandemic pent-up consumption demand will be over.

** China's first-quarter economic data published on Tuesday showed the recovery is uneven. Factory output growth was below expectations, and property investment remained weak.

** Still, the benchmark index is up nearly 15% since last November.

** In Hong Kong, tech shares fell 3.1%, tracking Wall Street's losses as earnings disappointment as well as looming U.S. debt ceiling fight started to worry investors.

** Meanwhile, U.S. Treasury Secretary Janet Yellen said on Thursday the country seeks "constructive and fair" economic ties with China, but will protect its national security interests and push back against Chinese actions to dominate foreign competitors. (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu and Eileen Soreng)