Chinese stocks in Hong Kong extended their recent gains, fueled by growing optimism surrounding the country’s advancements in artificial intelligence (AI), pushing the market closer to levels last seen in October, following a wave of government stimulus.
The Hang Seng China Enterprises Index surged by as much as 2.2% on Friday, approaching the October peak, with major contributions from tech giants such as Xiaomi Corp, Tencent Holdings Ltd., and Meituan. The CSI 300 Index, representing the onshore market, also saw a modest gain of 0.2%.
Investor enthusiasm was reignited by Chinese AI startup DeepSeek, which has stoked renewed interest in the country’s tech sector, overshadowing lingering concerns about ongoing trade tensions with the U.S. and uncertainties surrounding China’s economic recovery. This tech rally has prompted a reassessment of China’s growth potential, particularly in AI, after a period of underperformance in the stock market.
Despite the volatility that has plagued Chinese equities in recent years, some global investors are becoming increasingly optimistic about the prospects of a more sustained market rally. Deutsche Bank referred to the country’s progress in technology as a “Sputnik moment,” while a note from Goldman Sachs highlighted a surge in hedge fund interest, with large-scale purchases of Chinese stocks driven by long-term bets.
Market bulls are also hoping for additional stimulus measures from Beijing during the upcoming Two Sessions in March, which could further bolster the market’s upward trajectory. Extra policy support is seen as critical, especially as the property sector continues to struggle and the broader economy remains sluggish.
The Hang Seng China Enterprises Index has gained over 11% so far in 2025, one of the strongest performances in Asia. With the index just 2% shy of surpassing its October high, it is poised to reach its highest level since February 2022.
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