China’s blue-chip CSI300 Index dropped 0.9% by the lunch break, while the Shanghai Composite Index lost 0.8%.

Hong Kong’s benchmark Hang Seng shed 0.6%.

Tech shares have been a key driving force behind China’s bull run this year, with tech-focused STAR50 index jumping 40% so far this year.

Despite the recent sharp gains in tech shares, valuations remain relatively contained, said analysts at Dongxing Securities.

“A moderate degree of bubble may be necessary to spur innovation, with China’s focus on artificial intelligence as a core driver of industrial development seen as a clear strategic direction,” they said.

Meanwhile, China’s outstanding margin financing touched a new record high of ¥2.29 trillion (US$320.15 billion), surpassing the previous peak set a decade ago, as investors ramped up leveraged bets to chase the stock market rally.

The start-up board ChiNext Composite Index declined 3.2%.

The index has advanced nearly 40% so far this year.

Shares of Chinese chip firm Cambricon Technologies, which have doubled since the end of July, were roughly flat.

Tech majors in Hong Kong dipped 1.8%.

“While China is still catching up on software applications, optimism is rising thanks to a growing talent pool and rapidly evolving downstream AI models,” panelists said at a UBS A-share conference.

Investors are now focused on the military parade tomorrow, which President Xi Jinping is scheduled to address.

The CSI Defense Index fell 3%.