HONG KONG: Hong Kong stocks kicked off 2026 on a strong note and climbed to a 1-1/2-month high, as renewed optimism towards China’s domestic artificial intelligence sector buoyed the market.
The benchmark Hang Seng Index rose 2.8 percent on Friday to 26,338.47, hitting its highest level since November 17.
Last year, the index notched its best annual gain since 2017.
Leading the gains on Friday, the tech sector index leapt 4 percent in its best single-day rise since September, and the artificial intelligence (AI) index added 3.7 percent.
DeepSeek published a new paper earlier this week showcasing a cheaper way to develop AI, reigniting optimism towards Chinese tech capabilities.
Meanwhile, shares of Chinese AI chip designer Shanghai Biren Technology closed up 76 percent in their Hong Kong debut, also underscoring investors’ optimism towards the sector.
“AI technology narratives will still be the main theme running throughout the year,” with DeepSeek continuing to catalyse a revaluation of Chinese assets, analysts at Guolian Minsheng Securities said in a note.
“We believe that 2026, especially the first half, will remain favourable for Hong Kong stocks given the ongoing weak domestic economic recovery, Fed easing cycle, and fresh sector catalysts,” they said. Among other major winners on Friday, chipmaker Hua Hong Semiconductor closed up 9.4 percent, hitting its highest since November 20, and extending recent gains after the company announced a deal that would further enhance wafer foundry capacity.
Search engine operator Baidu rallied 9.4 percent to the highest level since September 2023. Internet giants Alibaba and Tencent both gained more than 4 percent.
Mainland China’s stock markets were closed on January 1-2 for the New Year holiday, and will resume trade on Monday, January 5.