HONG KONG - Hong Kong's Hang Seng Tech Index, which represents 30 largest technology companies listed in Hong Kong, once rose 3.44 percent in the afternoon session on Thursday.  

Traders’ rush to buy Chinese mainland technology stocks for their artificial intelligence potential has put the Hang Seng Tech Index on course for its highest level since the COVID-era reopening rally.

READ MORE: Mainland investors drive Hong Kong rally with $19 billion inflow

The gauge tracking mainland technology companies listed in the special administrative region rose as much as 2.3 percent on Thursday, poised for its highest close since February 2022. Kuaishou Technology, Bilibili Inc and Baidu Inc were among the top gainers.

The rise of mainland AI startup DeepSeek has sparked a hunt for possible service and application beneficiaries from the country’s advancement in large language models, fueling a rally in cheaply-valued tech shares. The index currently trades at 17.4 times forward multiples, still below its five-year average of 24.5 times.

ALSO READ: HSI hits 4-month high as global investors chase Chinese tech stocks

“Re-rating opportunities come when market reassess China’s innovative capabilities and corporate earnings growth following the AI breakthrough,” Raymond Ma, Invesco’s chief investment officer for the Chinese mainland and Hong Kong SAR, wrote in a note. “There is a strong case for potential re-rating, especially for Hong Kong-listed Chinese stocks, in which the valuation is much more attractive.”

With Bloomberg inputs