SHANGHAI: China stocks rebounded from a two-month low on Tuesday, led by tech shares, as sentiment improved on signs of easing geopolitical tensions and as global markets brushed off concerns that the AI sector is overheating. Hong Kong shares were also up.
China’s blue-chip CSI300 Index was up 1.3% by the lunch break, while the Shanghai Composite Index gained 1.1%. Hong Kong’s benchmark Hang Seng rose 0.6%.
President Donald Trump touted relations with China as “extremely strong” on Monday following a call with Chinese leader Xi Jinping, who told Trump that Taiwan’s “return to China” is a key part of Beijing’s vision for the world order.
AI-related shares led gains onshore, up 3%, while the CSI 5G Communications Index gained nearly 5%.
Meanwhile, tech majors traded in Hong Kong rose 1.2%, following an overnight rally in their counterparts traded in New York. The index is down nearly 20% from a four-year peak hit in early October.
Investors have been taking profits on most days this month in sectors that have rallied strongly in 2025, including technology and innovative drugs.
“We believe the current tech rally is far from over and is likely to resume after a short-term pullback. The key reason is that a fundamental reversal in the US AI industry appears unlikely, which should leave ample room for valuation expansion among comparable A-share companies,” analysts at Zhongtai Securities said in a note.
Shares of Alibaba were up 2.4% ahead of its earnings later in the day, which could affect sentiment among Chinese tech companies.
Shares of Xiaomi jumped most in near 7 months after its founder and chairman Lei Jun bought shares in the open market.
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