China, HK stocks jump as tech rally resumes on renewed AI push

HONG KONG: China and Hong Kong stocks rebounded on Wednesday, as the tech rally resumed on the country’s renewed AI push and financials jumped after analysts flagged banks’ reduced credit risk cycles.

China, HK shares slide

• The Hang Seng Tech Index snapped a two-day decline to soar 3.7% to hit a fresh three-year high. Hong Kong’s Hang Seng Index added 2.54% to 23,619.24.

• Leading the gains, Alibaba rallied 4.8%, recouping the losses from Tuesday, after announcing plans to make AI model for video and image generation publicly available.

• This followed a similar action from startup DeepSeek, which is now rushing to release next-generation R2 model, Reuters reported.

• “China’s tech re-rating narrative is still there on the back of AI optimism and the momentum should have a bit more room to go following a consolidation,” said Kenny Ng, strategist at Everbright Securities International in Hong Kong.

• On the mainland markets, the Shanghai Composite index gained 0.5% to 3,362.63 points at the midday break and the blue-chip CSI300 index rose 0.13%.

• The financial sub-index climbed 0.39% to lead gains onshore, after Morgan Stanley raised price targets for key Chinese banks.

• The major credit risk cycles have bottomed, including property, industrial and local government financing vehicle, which should reduce long-term risk concerns, analysts at Morgan Stanley said.

• A more balanced and sustainable growth model should support China banks re-rating, they added.

• Around the region, MSCI’s Asia ex-Japan stock index firmed 0.79%, while Japan’s Nikkei index eased 0.97%.