China's Tech Stocks Surge as AI Breakthrough and Xi's Outreach Boost Investor Confidence

DeepSeek's cost-efficient AI model and Xi Jinping's meeting with tech leaders signal a policy shift, driving market optimism.

• Hong Kong's Hang Seng Index has risen 13% this year, with tech shares driving gains and the Hang Seng Tech Index up 31% since mid-January.
• DeepSeek, a Chinese AI startup, has developed low-cost, high-performance AI models that rival U.S. counterparts, fueling investor enthusiasm.
• President Xi Jinping's meeting with tech leaders, including Alibaba's Jack Ma, is seen as a symbolic end to China's regulatory crackdown on the private sector.
• Goldman Sachs predicts AI adoption could boost Chinese equity earnings by 2.5% annually over the next decade and attract $200 billion in portfolio inflows.
• Despite the rally, analysts caution that much of the current investment is driven by short-term 'hot money,' with global investors still wary of China's market stability.

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