Chinese Stocks Extend Rally on AI Momentum
Summary
Chinese stocks listed in Hong Kong surged on Friday, driven by optimism over the country's advancements in artificial intelligence (AI). The Hang Seng China Enterprises Index jumped 2.7%, approaching its October 2022 peak.
AI Boost
China's growing AI capabilities have sparked enthusiasm among investors. DeepSeek, a promising AI startup, has demonstrated the nation's potential in the sector. Its success has prompted a reassessment of the beaten-down Chinese equity market.
Tech Momentum
Technology giants Xiaomi Corp, Tencent Holdings Ltd., and Meituan contributed significantly to the rally. The CSI 300 Index, a domestic benchmark, also gained 0.6%.
Tariff Relief
Signs that Donald Trump's tariffs on Chinese goods may be less severe than anticipated have added to the positive sentiment.
Foreign Investment
Despite past setbacks, some global money managers see more durable rally potential this time. Deutsche Bank has compared the tech progress to a "Sputnik moment," while Goldman Sachs reports hedge funds making large-scale purchases of Chinese shares.
Skepticism
However, skeptics caution that the AI buzz may have fueled speculative gains. Some worry that the rally may have gone too far.
Two Sessions Outlook
Bullish investors anticipate further stimulus measures from Beijing at the upcoming Two Sessions meetings. Added policy support could sustain the market's upward trend.
Market Performance
The Hang Seng gauge of Chinese stocks has risen 12% this year, outperforming most Asian markets. It is close to exceeding its October peak.