AI Frenzy Hits Chinese Tech Stocks: Hong Kong’s Hang Seng Index Surges 3.51%

Hong Kong's tech-heavy Hang Seng Index benefits from AI growth optimism as China’s e-commerce giant Alibaba partners with Apple for local AI collaboration

Asian markets presented mixed results, influenced by various factors affecting global economies. Japanese and Taiwanese stocks experienced declines, while Chinese mainland and Hong Kong exchanges saw strong growth, bolstered by the rapid surge in artificial intelligence (AI) investments.

The Shanghai Composite Index in mainland China rose by 0.43%, closing at 3346.72. In contrast, the Hang Seng Index in Hong Kong surged by 3.51%, ending the day at 22,579.05. Particularly notable was the performance of the Hang Seng Tech Index, which tracks the top 30 tech companies listed in Hong Kong, rising by over 5%.

The renewed focus on China's AI sector, particularly sparked by the global implications of the Deepfake (Deep Sick) incident, has propelled Chinese tech stocks to new heights. China’s largest e-commerce company, Alibaba, further fueled investor enthusiasm by officially partnering with Apple to explore AI opportunities in the local market. This collaboration marked a significant milestone in China’s AI sector, adding a layer of credibility and signaling future growth potential in the field.

According to South China Morning Post (SCMP), this development, combined with U.S. President Donald Trump’s recent decision to delay the imposition of additional tariffs, eased concerns over an imminent trade war, encouraging a boost in market sentiment. This alleviation of tariff-related fears has allowed AI growth expectations in China to take center stage, driving up Chinese technology stocks.

In an analysis by SPI Asset Management's Steven Innes, the delay of tariffs on imports from Canada and Mexico, along with the extension of tariff implementation on all imported goods until April, has been perceived not as a move towards a full-scale trade war, but rather as a typical strategy by President Trump to extract concessions from trading partners. Innes emphasized that traders believe the U.S. tariff risks can be mitigated in the short term, which could align the stock movements of Chinese AI companies with those of their U.S. counterparts, thereby benefiting from the ongoing AI boom in global markets.

On the other hand, Japan and Taiwan’s markets were not as fortunate. The Nikkei 225 index in Tokyo fell by 0.79%, closing at 39,149.43. Meanwhile, Taiwan's Taiex index dropped by 1.05%, settling at 23,152.61. The uncertainty surrounding President Trump’s tariff policies led to caution among international investors, particularly in Japan, where many major companies are heavily reliant on exports. According to Kohei Oonishi, Chief Investment Strategy Analyst at Mitsubishi UFJ Morgan Stanley Securities, the unpredictable impact of these tariff policies on the global economy caused overseas investors to exercise caution, particularly regarding Japanese stocks, which are sensitive to international trade dynamics.

In conclusion, while the tariff concerns caused volatility in Japanese and Taiwanese markets, the AI-driven optimism in Hong Kong and mainland China has provided a sharp contrast. Investors are betting on the rapid growth of Chinese AI companies, following a broader global trend of AI adoption that continues to reshape industries worldwide.