Chinese technology stocks tumbled the most in a month as Xiaomi Corp’s $5.5 billion share sale hit sentiment in a market that lacks fresh momentum.

The Hang Seng Tech Index dropped as much as 3.8% on Tuesday, which took its fall from a March 18 high to more than 9%. Xiaomi shares were down 6.6% at one point after the upsized placement.

Trading in Chinese shares have been choppy in recent sessions, as investors sought new drivers to extend a world-beating rally. While the nation’s tech earnings mostly topped estimates or came in line in the just-concluded earnings season, the momentum is getting harder to sustain as the Hang Seng Tech Index’s valuation nears a three-year average.

Earnings have been good so far, but they weren’t enough to bring “positive surprise,” said Steven Leung, an executive director at UOB Kay Hian Hong Kong Ltd. “Xiaomi’s upsized share placement has weighed on market sentiment today with some investors worrying about such offering creating pressure on market liquidity.”

Tuesday’s retreat bucks a rally across Asia following signals from US President Donald Trump that the sector-specific and reciprocal tariffs expected on April 2 may be less daunting than feared.

Even with the day’s slide, the Hang Seng Tech gauge remains up 24% for the year. Investors have rushed to re-evaluate Chinese tech stocks since the rise of DeepSeek earlier this year, with President Xi Jinping’s embrace of major business leaders also accelerating stock gains.

Any further slide will worry investors, and may potentially undermine a growing narrative that Chinese markets can become an alternative investment ground as investors reassess US exceptionalism.

Alibaba Group Holding Ltd. shares slid more than 3% after its chairman warned of a potential bubble forming in datacenter construction. Sunny Optical Technology Group shares plunged nearly 9% after the company cautioned against a capacity glut.

“Alibaba’s caution around a potential bubble in AI data center buildouts has added pressure, hinting that the red-hot AI theme may face a short-term bump,” said Charu Chanana, chief investment strategist at Saxo Markets.