Chinese Stocks Surge on AI Optimism, AI Frenzy:

Hong Kong-listed Chinese stocks sustained their recent rally, driven by growing optimism in the market outlook as the nation's AI capabilities soar.

Key Highlights:

* Hang Seng China Enterprises Index surged 4.1%, surpassing its October high to reach its highest level since February 2022.
* Alibaba, Xiaomi, and Tencent contributed significantly to the advance.
* China's rapid AI development has served as a catalyst for reevaluating the underappreciated equity market, with DeepSeek AI's capabilities highlighting China's progress in the sector.

Momentum Boosters:

* Alibaba shares extended gains after reports that President Xi Jinping plans to meet with business leaders next week, potentially signaling renewed support for the private sector.
* Less-severe tariffs than initially feared from the Trump era have eased concerns, adding to the positive sentiment.

Hedge Funds Drive Rally:

* Deutsche Bank labeled China's tech advancements as a "Sputnik moment," while Goldman Sachs reported aggressive buying of Chinese shares by hedge funds.

Skepticism and Caution:

* Some skeptics fear AI-related hype may inflate the rally, with knee-jerk gains seen in stocks announcing collaborations with DeepSeek.
* Market participants highlight potential uncertainty about the long-term monetization of DeepSeek's AI capabilities.

Expectations and Outlook:

* Bulls anticipate further stimulus measures at the Two Sessions to sustain the market's upward momentum.
* Additional policy support is crucial amid the struggling property sector and subdued economic growth.
* The Hang Sang China Enterprises Index has outperformed most Asian markets, gaining 14% year-to-date in 2025.