Hong Kong Stocks Surge to Four-Month High Amid Alibaba and Apple AI Partnership

Hong Kong’s stock market experienced a significant rally, with the benchmark Hang Seng Index surging by 563 points to close at 21,857, marking its highest level in more than four months. This impressive rise of 2.64 percent was fueled by a strong rally in Alibaba’s shares, which soared following reports of a strategic partnership with Apple. The market saw an exceptionally high turnover of HK$287.16 billion, the highest since October 10 of the previous year, signaling strong investor confidence.

Alibaba Leads the Charge

Alibaba (9988) was the most actively traded stock, with a turnover of HK$24.16 billion. The surge in its stock price—an impressive 8.5 percent increase to HK$113.80—came after reports emerged that Apple is partnering with the Chinese e-commerce giant to introduce artificial intelligence (AI) features for iPhone users in China. This collaboration is seen as a major strategic move for both companies. While Apple seeks to enhance its AI-driven smartphone capabilities in China, Alibaba gains a strong foothold in the evolving AI ecosystem, an area where it faces tough competition from domestic tech firms such as DeepSeek.

Tech and EV Stocks Shine

The Tech Index mirrored the broader market’s optimism, rising 2.7 percent to close at 5,281. Beyond Alibaba, other technology stocks also showed resilience and positive momentum.

In the electric vehicle (EV) sector, BYD (1211) surged over 7 percent to a record high of HK$352, reinforcing investor optimism about its competitive edge against global giants like Tesla. BYD’s strategic focus on smart-driving technology and AI integration is seen as a key factor in its growth trajectory. Meanwhile, BYD Electronic (0285) also experienced a remarkable surge of nearly 10 percent, reflecting strong investor sentiment in the EV and semiconductor sectors.

Property Stocks Rebound Amid Government Support

China’s real estate sector also saw renewed interest, led by reports that China Vanke (2202) is set to receive government assistance to cover a funding gap of approximately 50 billion yuan (HK$53.28 billion). The company’s stock soared as much as 18.6 percent before settling at HK$6.35. Other property firms followed suit, with Sunac China (1918) skyrocketing 20.8 percent and Shimao (0813) gaining 15.7 percent.

The strong performance of real estate stocks suggests growing confidence that government intervention will stabilize the sector, which has been grappling with liquidity concerns. Analysts believe that continued policy support and financial assistance could further lift investor sentiment in the coming months.

China’s Broader Market Gains

Mainland Chinese stock markets echoed the bullish sentiment seen in Hong Kong. The Shanghai Composite Index climbed to a new yearly high of 3,346 points, while the Shenzhen Component Index advanced by 151 points to close at 10,708. The rally was largely driven by tech-related gains, as China’s AI-driven stock surge attracted global investors.

According to Morgan Stanley strategists, the momentum behind China’s AI rally is expected to sustain in the near term, particularly given the relatively light positioning of global investors in the region. Analysts at UBS echoed this sentiment, noting that the AI boom, led by companies such as DeepSeek, could still have significant growth potential ahead, much like past advancements seen during the 4G, 5G, and cloud computing revolutions.

AI Boom and Its Impact on Global Markets

The excitement surrounding AI advancements is now playing a pivotal role in shaping global investment trends. Wall Street strategists believe that China’s strengthening AI capabilities will extend its stock market bull run. This is particularly important as AI models developed by Chinese firms, such as DeepSeek, are being created at a fraction of the cost compared to Western counterparts. Such cost-effective advancements give China a competitive edge in AI research and deployment.

Semiconductor Industry Developments

Amid the market rally, Semiconductor Manufacturing International (0981) announced that it would not voluntarily cut prices despite ongoing pricing pressures in the semiconductor industry. The company plans to introduce new products to remain competitive amid the fierce price war in the global chip market. This move highlights the challenges that semiconductor firms face in maintaining profitability while investing in research and development to stay ahead in an increasingly AI-driven world.

MSCI Adjustments Reflect Market Shifts

Despite the current market resurgence, MSCI announced that it would be removing 20 stocks from the MSCI China Index, following a massive removal of over 200 stocks last year. This move underscores the ongoing challenges faced by Chinese equities in gaining long-term investor confidence, despite the recent rebound. While the AI and tech sectors are flourishing, other segments of the market continue to struggle with regulatory uncertainties and shifting investor sentiment.

The Road Ahead for Hong Kong’s Market

With Alibaba’s partnership with Apple boosting confidence and China’s AI momentum attracting foreign interest, Hong Kong’s stock market is poised for continued gains. However, challenges remain, particularly in sustaining investor enthusiasm amid global economic uncertainties and evolving market dynamics.

As the AI revolution unfolds and China continues to enhance its technological capabilities, market participants will closely monitor how these trends translate into long-term growth and stability. For now, the optimism in Hong Kong’s stock market signals a promising start to what could be a transformative period for technology, finance, and investment in the region.