Hong Kong, China Stocks Surge to Three-Year High on Tech-Led Rally

AI Boom and Policy Support Fuel Market Optimism

Hong Kong’s stock market surged to a three-year high on Thursday, driven by a strong rally in technology stocks and renewed investor confidence in artificial intelligence (AI) shares. The bullish momentum was further supported by fresh policy commitments from Chinese regulators aimed at boosting the economy and stabilizing markets.

The Hang Seng Index soared 3.3% to 24,369.71, marking its highest level since February 2022. Meanwhile, the Hang Seng Tech Index jumped 5.4%, reaching its strongest level in over two years as enthusiasm around AI and technology-driven investments continued to gain traction.

Alibaba Leads Tech Surge with AI Breakthrough

Market heavyweight Alibaba led the charge, surging 8.4% to its highest point since late 2021. The rally was fueled by the company’s latest AI model announcement, which it claims is on par with the globally recognized DeepSeek R1.

Alibaba’s strong gains set the tone for broader investor optimism, pushing other AI-related and technology stocks higher across Hong Kong and mainland China.

Chinese Regulators Reaffirm Market Support

Investor sentiment received another boost in the late afternoon session following a joint press conference by top Chinese officials, including representatives from:

• The People’s Bank of China (PBOC)
• The China Securities Regulatory Commission (CSRC)
• Other key financial regulators

Officials pledged additional measures to support the economy and stabilize financial markets, further strengthening investor confidence.

Mainland China Markets Also Rally

China’s onshore markets followed suit, posting broad gains across major indices:

• The Shanghai Composite Index rose 1.2%
• The CSI300 Index (blue-chip index) climbed 1.4%
• The Chip sector subindex led gains with a 4% surge
• The Consumer staples sector advanced 1.9%

Tech Innovation and Consumption Drive Market Optimism

The latest National People’s Congress (NPC) meeting in China introduced a moderate fiscal package, which some analysts initially viewed as underwhelming. However, Morgan Stanley strategist Laura Wang noted that the government’s strong emphasis on technology innovation and consumption is expected to sustain the market’s bullish momentum.

“We remain positive on offshore equities and expect the latest tariff hike to disrupt but not derail the market’s momentum,” Wang stated in a note on Thursday.

Goldman Sachs Raises Target for Emerging Markets

The AI-powered rally in Chinese equities is beginning to influence global markets, with Goldman Sachs raising its target price for emerging market stocks on Thursday.

Analysts at the firm predict that China’s tech-driven resurgence could spill over into other emerging markets, offering new investment opportunities and reinforcing global investor confidence in AI and technology sectors.

Highlights from Thursday’s Market Rally

• Hang Seng Index jumped 3.3%, reaching a three-year high
• Hang Seng Tech Index surged 5.4%, hitting its highest level since late 2021
• Alibaba stock soared 8.4% after unveiling a new AI model
• Chinese regulators pledged additional economic and market support
• Shanghai Composite and CSI300 indexes gained 1.2% and 1.4%, respectively
• Goldman Sachs raised its target price for emerging market stocks

Outlook: Will the AI Rally Continue?

With China prioritizing technology innovation and consumption growth, analysts anticipate that the rally in tech and AI stocks could have a lasting impact on market sentiment.

Additionally, global investment banks like Morgan Stanley and Goldman Sachs continue to express optimism about China’s economic recovery, particularly in offshore equities and AI-driven investments.

As long as policy support remains strong and AI adoption accelerates, Hong Kong and mainland China stocks could maintain their upward trajectory, reinforcing investor confidence in the region’s long-term growth prospects.