(Bloomberg) — A blistering rally in Chinese technology shares accelerated on Wednesday as renewed bets on artificial intelligence sent a key gauge to the highest in nearly four years.
The Hang Seng Tech Index, which tracks the largest tech firms listed in Hong Kong, rose 4.2% to close at its highest level since November 2021. Search engine operator Baidu Inc led gains with a 16% jump but multiple tech giants came along for the ride: Shares of Alibaba Group Holding Ltd., Semiconductor Manufacturing International Corp, and JD.com Inc all surged.
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The index is now set for its seventh consecutive week of gains, helped by easing tensions between China and the US as well as hopes that tech companies’ big bets on AI will pay off. The gauge has jumped 42% this year, trouncing a benchmark of regional peers.
“China tech leaders are visibly re-accelerating AI spend and product rollouts — models, robotaxis, in-house chips — while also proving they can monetize AI faster than many expected,” said Charu Chanana, chief investment strategist at Saxo Markets. “With valuations lagging the U.S., investors are starting to pay attention again.”
The Hang Seng Tech Index trades at around 21 times forward earnings, below its five-year average of 23.3 times earnings and Nasdaq 100 Index’s ratio of 27 times, according to Bloomberg-compiled data.
If the rebound continues, it could accelerate the return of capital to China’s markets after years of gyrations due to regulatory crackdowns and post-pandemic economic woes. The surprise debut of a DeepSeek AI model at the start of this year has fueled renewed interest in the whole Chinese AI universe, putting the country back on the map as a contender for AI leadership.
Brokers are quickly lifting price targets. Goldman Sachs Group Inc. has raised its target for Alibaba’s shares, citing a better outlook for its cloud business. Arete Research Services LLP lifted its rating on Baidu’s American depositary receipts to buy from sell on the growth potential for its in-house chip business. Shares of battery maker Contemporary Amperex Technology Co. have soared this week after JPMorgan Chase & Co. upgraded its rating on the company.
The rally meant the Hang Seng Tech Index eclipsed rival gauges in Asia on Wednesday, with investors largely holding back from big bets elsewhere as they await a Federal Reserve meeting. An MSCI index of the region’s shares was little changed near the end of Asian trading.
