(Bloomberg) — Chinese stocks in Hong Kong extended a recent rally as the nation’s growing capabilities in artificial intelligence boosted optimism over the market’s outlook, while a potentially momentous show of support for the private sector gave sentiment an extra lift.
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The Hang Seng China Enterprises Index jumped 4.1% on Friday to hit the highest since February 2022 — surpassing an October peak spurred by a stimulus blitz. Gains in Alibaba Group Holding Ltd., the biggest boost to the gauge, accelerated in the afternoon session after Bloomberg News reported that its co-founder Jack Ma and other prominent entrepreneurs were invited to meet the nation’s top leaders.
“The Xi-Ma news gave the market another kick and prompted people to look at this ‘widely shunned’ space — Chinese Internet,” said Jian Shi Cortesi, a portfolio manager at Gam Investment Management in Zurich. “Either we see a sustained rally this time, or the government will keep trying until we see that rally.”
The meeting, which President Xi Jinping is expected to attend, has the potential to send a powerful signal that China’s Communist Party is adopting a more supportive stance toward private-sector companies that fuel most of the country’s economic growth. It is likely to take place as soon as next week and may include DeepSeek founder Liang Wenfeng, said people familiar with the matter.
Enthusiasm for the nation’s technology shares has deepened as China is fast catching up with the global AI frenzy after missing out in the past few years. AI startup DeepSeek’s prowess has served as a wake-up call for investors who underestimated the nation’s growth potential in the sector, and led to a broader re-evaluation of the beaten-down equity market.
The DeepSeek revelation “is a reflection that China is making progress on its new productive forces and self sufficiency goals,” said Marvin Chen, a Bloomberg Intelligence strategist. “The tech momentum may carry the market into March,” when attention turns to the Two Sessions meeting and corporate earnings as the next driver, he added.
Adding to the wave of optimism are signs that Donald Trump’s tariffs on Chinese products — 10% in the initial offensive — may turn out to be less drastic than feared.
Mainland investors have been snapping up Hong Kong shares as the rally extended. They bought HK$7.7 billion ($989 million) of the city’s equities on a net basis on Friday after selling the previous day.
