China, Hong Kong stocks gain as chip, AI rally lead rebound

HONG KONG: Chinese and Hong Kong shares bounced on Wednesday, as a rally in chip and AI stocks drew investors away from pricier global peers and into the domestic substitution story. The blue-chip CSI300 index was up 0.6% by the midday break, rebounding from a one-month low hit earlier in the session. The Shanghai Composite index was up 0.5% at 4,011.05 points, also recouping losses in the opening hour. In Hong Kong, the benchmark Hang Seng Index rallied 2.4% to a three-week high, and was on track for the best day in over a month. A powerful rebound in chip and AI-related names propelled the broader market higher despite a sell-off in other regional markets and overnight in the US, as investors rotated into cheaper companies. Chinese authorities have held meetings with top tech firms over the past month about potentially restricting overseas access to the country’s most advanced AI models. Meanwhile, DeepSeek is developing its own AI chip that could reduce its reliance on Nvidia and Huawei. The CSI Semiconductor Index rallied 4.1% and the CSI AI Index jumped 3.9%. The Hang Seng Tech Index rallied 4.3%, on track for the biggest single-day gain since June 2. “It’s a technical rebound. The chip rally in other markets is starting to lose steam and investors who have been cutting China and Hong Kong exposures to fund those trades are now taking profits and rotating back to cheaper companies,” said Jason Chan, strategist at Bank of East Asia. Optimism about China’s AI progress and domestic substitution for chips is also helping sentiment, he said. “I think this rebound has more legs to run this quarter.” Among gainers, shares of Knowledge Atlas Technology rallied more than 10% despite the lock-up expiry after state media reported most of its cornerstone investors are holding for the long-term. ‑Reuters