Hong Kong stocks soared to a four-month high on Wednesday as global investors piled into Chinese tech stocks, betting on the sector’s artificial intelligence potential after months of underweight exposure, investment strategists said.
The benchmark Hang Seng Index jumped 2.64 percent to close at 21,857.92, with daily trading volume reaching HK$287.1 billion ($36.9 billion). The Hang Seng Tech Index gained 2.7 percent to 5,281.18, while the Hang Seng China Enterprises Index, which tracks mainland equities listed in Hong Kong, advanced 2.75 percent to 8,058.08.
Alvin Ngan, an equity strategist at the research department of Zhongtai Financial International Ltd, sees strategic capital entering the market, particularly from foreign investors who were previously underweight in Hong Kong shares.
“Despite US tech sanctions, China’s ability to develop autonomous and cost-effective AI solutions has sparked a major revaluation of the sector among foreign investors who had been sitting on the sidelines,” Ngan said.
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DeepSeek, an AI startup from Hangzhou, eastern Zhejiang province, stands out among large language model competitors like ChatGPT by adopting less sophisticated chips in its AI model and displaying its reasoning before delivering answers. The app shot to the top of US iPhone downloads shortly after its January release.
Hong Kong-based stock commentator Conita Hung Lai-ping echoed Ngan, said that Hangzhou-based startup DeepSeek has convinced investors that China’s AI capabilities are advancing “more rapidly and are cheaper than expected, making widespread AI adoption more feasible across the mainland market”.
Raymond Ma, chief investment officer of Chinese mainland and Hong Kong at Invesco, said, “The benefits brought by DeepSeek, including higher efficiency and much lower barriers for various industries to use AI, could benefit many listed companies in China and lead to rerating of Chinese stocks.”
The AI breakthrough has compelled major Wall Street banks to turn bullish on Chinese tech equities. James Wang, head of China strategy of UBS Investment Bank Research, said, “The launch of DeepSeek’s R1 model has put AI development in China back on investors’ radar.”
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“Our tracking of AI-related China-listed stocks shows that since the start of the year, the stocks are up 15 percent and have outperformed MSCI China by 9 percent,” Wang added.
Wang said he believes thematic trading could be a key feature of this year’s equity market, citing the uncertain yet potentially pervasive nature of AI applications, relatively loose monetary policy, and uncertain macroeconomic recovery resulting in fewer single stock choices.
“Global investors are beginning to reassess the investability of China in the technology and AI fields,” Morgan Stanley strategist Laura Wang wrote in a report on Tuesday. “Given that global investors have relatively low positions, we expect this momentum to continue in the short term.”
AI-related automotive stocks led the gains in Hong Kong, with Apollo Future Mobility Group surging 7.7 percent and BYD, China’s largest electric-vehicle maker, advancing 7.4 percent.
tianyuanzhang@chinadailyhk.com
