DeepSeek Influences Hang Seng as Hong Kong Stocks Climb on Valuation Realignment

Hong Kong stocks are witnessing a bullish trend as DeepSeek ignites shifts in valuations within the tech sector. The Hang Seng Index rose by 0.2% to 20,235.11 at 10.07 AM local time, continuing a previous 0.7% advance. Baidu saw a remarkable rise of 4%, reaching HK$88.20, while tech players such as Xiaomi and Tencent also made gains. This positivity contrasts with the downturn of China's SMIC and Lenovo Group, which fell 3.3% and 2.3% respectively.

The catalyst behind this valuation shift is DeepSeek's R1 model, which surpassed OpenAI's ChatGPT in downloads on the Apple US AppStore, triggering skepticism about high tech valuations in the US. Notably, Nvidia plummeted 17% and Micron dropped 12%, leading to a staggering US$1 trillion rout in tech and chip markets. Analysts predict a future where demand for high-end chips diminishes, with China bolstering its semiconductor production amidst this landscape.

As major Asian markets face declines, with Australia's S&P/ASX 200 down 0.2% and Nikkei 225 losing 0.7%, investor focus pivots to Hong Kong stocks. Trading will pause from midday for the Lunar New Year and will resume on January 31, with mainland exchanges reopening on February 5.