SHANGHAI, August 3 (Reuters) - China stocks fell on Monday

as a global rout in artificial intelligence-related shares

dragged down semiconductor stocks, while Hong Kong's internet

platforms bucked the trend, led by a jump in Alibaba ( BABA ) after it

released its latest AI model.

** China's blue-chip CSI300 Index dropped 0.7% by

the lunch break, while the Shanghai Composite Index lost

0.6%. Hong Kong benchmark Hang Seng was flat.

** The selling in AI-related stocks globally, with the

chip-heavy Kospi index down 20% last month in South

Korea, has rocked markets and pushed investors to reassess the

valuation of China semiconductor stocks.

** The tech-focused STAR50 Index fell 3.7%, while

the CSI All Share Semiconductor Index dropped 5.2%.

However, shares of newly listed memory chip giant CXMT

rose 2.7% as its valuation still appears reasonable

compared to other smaller players in the sector.

** "We believe that, under the broad assumption that the AI

industry trend has not yet reached bubble territory nor come to

an end, the recent pullback could actually improve the

risk-reward profile of AI trades from a medium- to long-term

perspective," analysts at CICC said in a note.

** "Therefore, even though most investors still view AI

technology as the core investment theme, after such violent

turbulence, a degree of portfolio rebalancing is likely a

natural response for many," they said.

** Alibaba ( BABA ) shares jumped nearly 7% after it

released what it said is its largest and most capable

artificial-intelligence model, the Qwen3.8-Max.

** Tech majors listed in Hong Kong rose nearly 1%.

** China's manufacturing sector expanded at its slowest pace

in four months in July, as output and new orders rose more

slowly, while export orders returned to growth after a

contraction, a private-sector survey showed on Monday.