Chinese technology stocks "surge": Driven by AI acceleration, Hangke significantly outperformed Nasdaq this year
This year, the Hang Seng TECH Index has surged by 41%, outperforming the Nasdaq Index by 17%. The breakthroughs in AI large models such as DeepSeek at the beginning of the year became a key turning point, followed by the market recognition of AI products from Alibaba, Tencent, and Baidu
Under the narrative drive of artificial intelligence, Chinese tech stocks have far outperformed their American counterparts this year.
So far this year, the Hang Seng TECH Index has surged 41%, significantly exceeding the 17% increase of the Nasdaq Index during the same period.
This rally began at the start of the year with breakthroughs in DeepSeek's artificial intelligence, accelerating further in September.
"The entire narrative around Chinese AI has completely changed," said Winnie Wu, Chief China Equity Strategist at Bank of America Global Research:
"It feels like China is making breakthroughs in this very important bottleneck of AI computing power."
Breakthroughs in AI Large Models as a Key Turning Point
"Animal spirits are back," said Albert Kwok, Emerging Markets Equity Portfolio Manager at PGIM Jennison Associates. He noted that the emergence of DeepSeek in February was a "key moment" that changed everything.
Additionally, AI large models such as Alibaba's "Tongyi Qianwen" (Qwen), Tencent's "Yuanbao," and Baidu's "Wenxin Yiyan X1.1" (Ernie X1.1) have received positive reviews from analysts and ranked highly in industry benchmarks.
These advancements have ignited market hopes for the widespread commercialization of AI technology and productivity improvements in China. Furthermore, progress made by companies like Baidu in developing high-end chips and increased spending on AI infrastructure have also supported this rally.
So far this year, the stock prices of Alibaba, Tencent, and Baidu have risen by 96%, 55%, and 59%, respectively, with Alibaba and Baidu increasing by 31% and 48% in just the past month. "This is the Fourth Industrial Revolution," said Bush Chu, China Equity Portfolio Manager at Aberdeen:
"We are seeing AI fundamentally change the way people work and interact with machines and even society."
Foreign Capital is Flowing In
This optimism is not limited to large tech companies but extends to chip manufacturers like Cambrian and biotech companies. So far this year, the CSI AI Index has returned over 61%, while the Hang Seng Biotech Index has surged by 98%.
Initially, the main buyers in this AI market rally were investors from mainland China. However, as technological advancements become increasingly clear and valuations remain relatively cheap, global investors have also begun to refocus. "Foreign investors are coming back, rebuilding their exposure to China," said Jack Siu, Head of Discretionary Portfolio Management for Asia at Lombard Odier. GAM Holding Group CEO Albert Saporta also noted:
"Chasing momentum is a global affliction. Underweighting Chinese tech stocks will be painful."
