HSI jumped 32% as of Sep 16 this year, breaking through the 26,000-point milestone. Tech sector reignites market sentiment, SMIC soaring nearly 100% YTD; Alibaba up 90%; Netease up 80%; Xiaomi up 63%; Tencent up 56%; Meituan underperformed the HSI amid delivery price war.

Hong Kong’s stock market is expected to extend its growth streak in fourth quarter of this year, driven by anticipated US rate cuts and China’s strong economic stimulus.

The weakening US dollar also bodes well for Hong Kong stocks, which account for a large share of emerging markets, said Meng Lei, a Chinese stock strategy analyst at UBS Securities.

SMIC

Chinese semiconductor stocks are getting a boost from hopes that more of the chips used in China will be made locally. If demand is strong enough, then local fabs can increase capacity despite low yields, Bernstein analyst Qingyuan Lin said.

DeepSeek, which made waves with a breakthrough low-cost AI model earlier this year, hinted in a technical paper that the next generation of AI chips made by Chinese companies is coming soon. The company said that its latest large-language model uses a new format designed for next-gen homegrown chips.

That seems to suggest that it will use more China-made chips for future model development, China Securities analysts said in a note.

Alibaba

Alibaba’s shares surged as investors cheered the Chinese tech giant’s recent series of moves to boost AI development and stay ahead of the race.

The Chinese e-commerce giant said that it plans to raise US$3.2 billion by issuing zero-coupon convertible bonds. It will use approximately 80% of the net proceeds on cloud infrastructure to scale up its data centers, upgrade technology and improve services to meet growing demand. The rest of the fund will be spent on international e-commerce operations.

Jefferies analysts think the convertible bond offering is a sign of the company’s confidence in its outlook and expect Alibaba’s cloud revenue to keep growing rapidly thanks to demand for AI services.

Alibaba said in late August that cloud revenue grew 26% in the April-June quarter on the back of surging demand for AI services. Chief Executive Eddie Wu has said “AI plus cloud” is one of Alibaba’s two engines of growth alongside e-commerce. In February, Alibaba said it would invest at least $53 billion in the area over the next three years.

NetEase

Chinese gamemakers are benefiting as younger consumers snap up creature comforts in a slowing economy. In addition, they’re getting help from an improved domestic regulatory and competitive environment, as well as the safehaven appeal of game stocks globally amid US tariffs and chip-export restrictions.

“The resilience of video games is a result of savvy Chinese consumers shifting spending to cheaper services that offer emotional support, rather than big-ticket physical goods,” said Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management. “The trend of consumer spending crowding to top games and the biggest companies is unlikely to change in the short term if deflation persists.”