The Hang Seng China Enterprises Index rose as much as 2%, with technology stocks including Alibaba Group Holding Ltd. and Xiaomi Corp. contributing the most to the advance.

Chinese stocks in Hong Kong gained after a meeting between President Xi Jinping and prominent entrepreneurs signalled Beijing’s endorsement of the private sector. 

The Hang Seng China Enterprises Index rose as much as 2%, with technology stocks including Alibaba Group Holding Ltd. and Xiaomi Corp. contributing the most to the advance. The gauge has now gained more than 23% since a low in January. The CSI 300 Index, an onshore benchmark, also edged higher. 

Xi promised to abolish unreasonable fines against private firms and urged entrepreneurs to maintain their competitive spirit. The show of support is seen adding fuel to this year’s world-beating stock rally in Chinese stocks, which has largely been driven by optimism over DeepSeek’s artificial intelligence capabilities. Alibaba’s Jack Ma and DeepSeek founder Liang Wenfeng were among the attendees at the meeting. 

It’s a rare moment in the limelight for the nation’s behemoth tech sector, after being shunned by investors for years amid price wars, sluggish consumer demand, and regulatory uncertainties. Wall Street strategists including those at Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. have released bullish calls in recent weeks as they expect AI to support corporate earnings and prompt a re-evaluation of the broader market.

“President Xi’s meeting with Chinese entrepreneurs marks a significant shift in China’s approach to the private sector,” said Charu Chanana, chief investment strategist at Saxo Markets. “This should add further momentum to the China tech names which have been rallying on the back of DeepSeek development and flows getting diverted from the capex-heavy Magnificent Seven.”

Up more than 25% in 2025, the Hang Seng Tech Index is beating gains seen in the broader equity indexes in Hong Kong and China. 

In contrast, China’s 10-year government bonds fell, with yields rising two basis points to a level unseen since December. That came as investors shift funds into stocks and liquidity tightens in the money market.

Sceptics caution that AI will do little to resolve economic woes ranging from the property crisis and a lack of consumer confidence. It’s also unclear how DeepSeek’s technological achievements will filter through to corporate earnings. Chinese stocks have seen multiple false dawns over the past years — most recently the stimulus-driven rebound in late September that cooled within months.  

Focus is now on an annual legislative meeting in March, where the nation’s top leaders are expected to unveil the economic blueprint for 2025 and may discuss concrete support measures for the private sector. 

What Bloomberg Intelligence says:

“Renewed enthusiasm for China’s tech firms is based mostly on the false premise that DeepSeek’s breakthrough in AI will drive a renaissance in the sector’s earnings outlook. We disagree and believe the earnings outlook at most firms remains largely unchanged. Rising economic uncertainty, plus the risk of escalating tensions with the US, make for an uncertain sector outlook in 2025.”

— Analysts Robert Lea and Jasmine Lyu

“The signals from these meetings can be fleeting,” Hao Hong, partner and chief economist at GROW Investment Group, said on Bloomberg TV. Chinese stocks have seen a “good rebound” but a lot more needs to be done to help the economy, he said.