Hong Kong Stocks Soar on AI Momentum and Government Backing
Hong Kong’s stock market experienced a remarkable surge as advancements in artificial intelligence and potential policy shifts in favor of private enterprises instilled confidence among investors. The Hang Seng China Enterprises Index saw a significant leap of 4.1%, propelled primarily by Alibaba, following reports of high-level discussions involving business moguls.
AI Boom and Private Sector Support Drive Market Optimism
Investor sentiment reached new highs as China’s rapid progress in artificial intelligence reshaped market perceptions, while fresh indications of government support for private enterprises further amplified enthusiasm. On Friday, the Hang Seng China Enterprises Index climbed to its highest level since February 2022, surpassing the stimulus-driven peak observed in October. Alibaba’s strong performance played a major role in this rally, particularly as its momentum accelerated in the afternoon session after Bloomberg News disclosed that its co-founder, Jack Ma, along with other influential entrepreneurs, had been invited for a pivotal meeting with China’s top leadership.
“The Xi-Ma news reignited interest in Chinese tech stocks, a sector that had been largely ignored,” said Jian Shi Cortesi, portfolio manager at Gam Investment Management in Zurich. “This could mark the beginning of a sustained rally, or if not, the authorities are likely to keep pushing until the market stabilizes.”
High-Stakes Meeting Signals Pro-Business Shift
Market watchers are keenly anticipating a landmark meeting expected to include President Xi Jinping, which could signal a more favorable policy environment for private firms—critical players in China’s economic expansion. The meeting, likely to occur next week, might also see the participation of DeepSeek founder Liang Wenfeng, according to sources familiar with the matter.
China’s accelerating AI growth has heightened enthusiasm in the tech sector, with DeepSeek’s rapid advancements serving as a wake-up call for investors who had previously underestimated the nation’s potential. This newfound optimism has led to a broader reevaluation of Chinese stocks, which had been struggling in recent years.
Tech Stocks and AI Firms Fuel Rally
Shares of tech giants, including Tencent Holdings Ltd., rode the wave of optimism, with Tencent’s rally even boosting its major shareholder, Naspers Ltd., to a record high in South Africa.
Adding to the positive sentiment are indications that Donald Trump’s proposed tariffs on Chinese imports, initially feared to be severe, may be less damaging than expected.
As mainland investors continued pouring money into Hong Kong equities, Friday witnessed net purchases amounting to HK$7.7 billion ($989 million), reversing the selling trend from the previous day.
Skeptics Raise Questions Over AI-Fueled Rally
Despite the enthusiasm, some experts are wary of whether the AI-driven surge can be sustained. Comparisons have been drawn to previous stock booms where companies saw immediate gains simply by associating with emerging technologies like blockchain or the metaverse.
“At this stage, it’s difficult to determine the long-term commercial viability of DeepSeek’s advancements,” said Helen Zhu, chief investment officer at NF Trinity, in an interview with Bloomberg TV. She also cautioned that there remains uncertainty over whether DeepSeek’s successes can be replicated at scale.
A ‘Sputnik Moment’ for China’s Tech Sector?
Global investment banks are taking notice. Deutsche Bank likened China’s recent AI breakthroughs to a “Sputnik moment,” while a Goldman Sachs report revealed that hedge funds are making aggressive purchases of Chinese equities, primarily through long positions.
Bulls are betting on additional stimulus measures at China’s upcoming Two Sessions meetings—key annual gatherings of the country’s legislative and advisory bodies—which could provide further fuel for the rally. Many believe sustained government support is necessary, especially given ongoing weaknesses in the real estate sector and the broader economy.
So far in 2025, the Hang Seng China Enterprises Index has climbed 14%, making it the best-performing stock index in Asia.