Hong Kong stocks returned to the green on Wednesday as fears over artificial intelligence's impact on traditional business models faded.

The Hang Seng Index rose by around 175.40 points, or roughly 0.7%, to end at 26,765.72, while the Hang Seng China Enterprises Index gained by 26.89 points, or 0.3%, to close at 9,034.75.

Markets previously turned bearish over the potential fallout from AI displacing white-collar workers, but now appeared to be optimistic regarding technology companies' prospects in 2026.

Earlier, UBS said it expects China's technology industry to thrive this year due to higher investment and advancements in artificial intelligence, Investing.com reported.

Meanwhile, Hong Kong's economy is expected to grow 2.5% to 3.5% this year, supported by resilient exports, steady domestic demand, and improving financial conditions, Financial Secretary Chan said in his 2026-27 budget speech.

In corporate news, HSBC Holdings (HKG:0005) reported $21.1 billion in attributable profit for 2025, topping its estimate of $20.3 billion, though down from $22.9 billion in 2024.

Earnings per share slipped to $1.20 from $1.24 a year earlier.

Shares of the bank closed over 5% higher.