SHANGHAI: China’s blue-chip stocks slipped on Thursday, while investors snapped up banking and artificial intelligence (AI) shares after data showed the country’s economic recovery was losing steam.

China’s blue-chip CSI300 Index closed down 0.1%, while the Shanghai Composite Index added 0.4%.

Hong Kong’s benchmark Hang Seng Index ended 0.9% higher, while the Hang Seng China Enterprises Index advanced 1.2%.

Other Asia-Pacific share indexes rallied, following Wall Street’s lead, and the dollar held just below a two-month high versus the yen amid signs the United States might be close to a deal to raise the debt ceiling and avert a disastrous default.

China’s April industrial output and retail sales growth undershot forecasts, suggesting the economic recovery is losing momentum.

That prompted Nomura to cut its forecast for China’s 2023 gross domestic product (GDP) growth to 5.5% from 5.9% previously and expect China’s benchmark lending rates to be cut in June.

Chinese state firms such as banks went up 1.2%, while AI-related companies, including information technology and media, climbed 1.4% and 3.1%, respectively.

“Domestic investors are probably piling into state firms as a hedged play on a recovery in which no one yet seems fully confident,” said analysts at Gavekal Research. “The rally in stocks with cheap valuations and high dividend yields fits China’s current uncertain macro environment.”

In Hong Kong, tech giants jumped 1.2%, with Alibaba up 2.7% ahead of its earnings results. The firm is expected to show a 3% rise in revenue.