China, Hong Kong stocks gain on AI optimism

HONG KONG: China and Hong Kong stocks erased early losses to end marginally higher on Wednesday, as investor caution around the U.S. rate decision was overcome by gains in Alibaba after it said it will raise prices for artificial intelligence-related products.

Shanghai Composite Index rose 0.32%, snapping a four-day losing streak. China’s blue-chip CSI300 Index gained 0.45%.

Hong Kong benchmark Hang Seng advanced 0.61%, a third consecutive day of gains.

Alibaba Group closed 2.3% higher after its cloud business announced a price hike for AI computing power and storage products.

That lifted broader investor sentiment towards tech shares in China and Hong Kong markets.

Telecommunication and AI stocks jumped 5.6% and 3.7% respectively in mainland-listed shares.

In Hong Kong, large language model upstarts MiniMax and Knowledge Atlas Technology surged more than 19% each.

Hang Seng Tech, however, closed flat after a 22% slump in Tencent Music Entertainment.

Meanwhile, the U.S. Federal Reserve will deliver its policy decision on Wednesday. Although markets expect the central bank to keep rates unchanged, its commentary on inflation and the economic outlook amid the U.S.-Israeli war on Iranwill be parsed for clues on the future monetary policy path.

The closure of the Strait of Hormuz also weighed on some investor confidence, as China relies on Iranian oil imports.

Investors are “wary of market risks arising from a shift in Fed policy or any unexpected turn of events in the war,” Nanhua Futures analysts said in a note.

Adding to that, Beijing is restricting certain Chinese companies incorporated overseas from seeking listings in Hong Kong.

The smaller Shenzhen index was unchanged, start-up board ChiNext Composite index rose 0.89% and Shanghai’s tech-focused STAR50 index gained 0.44%.