Chinese Stocks Surge as AI Capabilities Boost Optimism
Hong Kong-listed Chinese stocks continued their rally on Friday, fueled by growing optimism over the country's advancements in artificial intelligence (AI).
The Hang Seng China Enterprises Index climbed 2.7%, approaching October's peak. Xiaomi Corp, Tencent Holdings Ltd., and Meituan were the top contributors. The onshore CSI 300 Index rose 0.6%.
China's AI capabilities have been catching up rapidly after lagging in recent years. The prominence of AI startup DeepSeek has sparked a re-evaluation of the beaten-down equity market.
"It reflects China's progress towards self-sufficiency and new productive forces," said Marvin Chen, a Bloomberg Intelligence strategist.
Positive sentiment was also fueled by signs of less-severe tariffs on Chinese products, originally imposed by Donald Trump.
Global investors, once cautious, now see opportunities for a more sustainable rally. Deutsche Bank compared China's tech progress to a "Sputnik moment," while Goldman Sachs reported hedge funds purchasing Chinese shares in large volumes, driven by long buys.
However, skepticism lingers about the impact of AI on the rally, as some stocks have seen knee-jerk gains from mere collaborations with DeepSeek. Helen Zhu of NF Trinity expressed concerns about monetization potential and the replicability of DeepSeek's success.
Bulls anticipate further stimulus from the upcoming Two Sessions, which could support the market's momentum. The Hang Sang gauge has gained over 12% in 2025, showcasing Asia's strongest performance. It is close to surpassing its October peak.