HONG KONG: Hong Kong stocks kicked off 2026 on a strong note to climb to a one-month high, as renewed optimism towards China's domestic artificial intelligence sector continued to buoy the market.
By the midday break on Friday, the benchmark Hang Seng Index had added 2.2% to 26,189.79, its highest level since December 2.
That extended the rally from 2025, which was the index's best annual gain since 2017.
Leading the gains on Friday, the tech sector index leapt 3.4% to the highest level since November 18, and the artificial intelligence (AI) index added 3.2%.
That came after DeepSeek published a paper this week showcasing a cheaper way to develop AI, reigniting optimism towards Chinese tech capabilities.
"AI technology narratives will still be the main theme running throughout the year" with DeepSeek continuing to catalyse a revaluation of Chinese assets, analysts at Guolian Minsheng Securities said in a note.
Shares of Chinese AI chip designer Shanghai Biren Technology more than doubled in their Hong Kong debut, kicking off the financial hub's first listing of 2026 with a bang.
"Tech optimism continues" and the strong initial public offer performance on Friday gave an additional boost to sentiment, said Wee Khoon Chong, APAC Macro Strategist at BNY.
Among other major winners on Friday, chipmaker Hua Hong Semiconductor jumped nearly 10% to hit its highest since November 20, extending recent gains after the company announced a deal that would further enhance its 12-inch wafer foundry capacity.
Search engine operator Baidu rallied 7.5% to the highest level since September 2023.
Mainland China's stock markets were closed on January 1-2 for the New Year holiday, and will resume trade on Monday, January 5. - Reuters
