Chinese stocks in Hong Kong saw a boost after President Xi Jinping’s recent meeting with leading entrepreneurs, signaling Beijing’s endorsement of the private sector.
The Hang Seng China Enterprises Index rose by as much as 2%, driven by gains in technology stocks such as Alibaba Group Holding Ltd. and Xiaomi Corp. The index has surged over 23% since January’s low, while the CSI 300 Index, a key onshore benchmark, also saw modest gains.
Xi’s remarks included a promise to eliminate unreasonable fines on private firms and urged entrepreneurs to maintain their competitive spirit. This show of support is seen as a key factor in propelling China’s stock market rally this year, which has largely been fueled by optimism surrounding DeepSeek’s artificial intelligence capabilities. Alibaba’s Jack Ma and DeepSeek founder Liang Wenfeng were among those present at the meeting.
Tech Sector Rebound Amid AI Optimism
The meeting marks a rare moment of spotlight for China’s massive tech sector, which has faced years of investor skepticism due to price wars, sluggish consumer demand, and regulatory uncertainty. Recently, top Wall Street strategists from firms like Goldman Sachs, Morgan Stanley, and JPMorgan Chase have become more bullish on Chinese stocks, with expectations that AI advancements will bolster corporate earnings and prompt a market re-evaluation.
Charu Chanana, chief investment strategist at Saxo Markets, said, “President Xi’s meeting with Chinese entrepreneurs marks a significant shift in China’s approach to the private sector. This should further boost the momentum of China’s tech stocks, which have been rising due to DeepSeek developments and capital flows moving away from the large-cap, capital-heavy tech companies.”
The Hang Seng Tech Index has risen more than 25% in 2025, outpacing broader equity indexes in Hong Kong and China.
Bond Yields Rise as Funds Shift to Stocks
Meanwhile, China’s 10-year government bonds fell, with yields rising two basis points to levels not seen since December. This shift reflects investor movement towards stocks as liquidity tightens in the money market.
Skeptics Warn of Challenges Ahead
Despite the current rally, some skeptics remain cautious. They argue that AI advancements will not address the country’s ongoing economic issues, such as the property crisis and weak consumer confidence. The impact of DeepSeek’s technology on corporate earnings remains uncertain, and Chinese stocks have experienced several false starts in recent years, including a brief stimulus-driven rebound in late September that quickly lost momentum.
Focus Shifts to March Legislative Meeting
Attention now turns to China’s upcoming annual legislative meeting in March, where top leaders are expected to present the economic blueprint for 2025. This could include concrete support measures for the private sector, which would further shape the country’s economic outlook.
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