Hong Kong stocks closed higher Monday as investors welcomed signs of easing tensions in the Middle East

The Hang Seng Index rose 124.97 points, or 0.5%, to close at 26,009.40, while the Hang Seng China Enterprises Index gained 40.00 points, or 0.5%, to finish at 8,652.15.

Oil prices fell more than 4% after U.S. President Donald Trump said talks with Iran would take place on Monday, raising hopes of a diplomatic breakthrough and the reopening of the Strait of Hormuz.

Investors continued to assess the outlook for AI-related spending following recent earnings from major U.S. technology companies, while remaining cautious over elevated valuations.

Meanwhile, Hong Kong Financial Secretary Paul Chan said the economy expanded 5.1% in the first half of the year, outperforming expectations.

He said strong demand for artificial intelligence products, resilient financial and business services, and rising visitor arrivals are expected to support growth in the second half.

In corporate news, Alibaba (HKG:9988) closed 7% higher after launching Qwen3.8-Max, its most advanced artificial intelligence model to date.