In early 2024, China faced challenges in its post-pandemic recovery, with subdued consumer spending, concerns about the property market, and lingering effects of a regulatory crackdown on the tech industry. This pessimism was evident in Hong Kong's stock market where listings had dwindled under regulatory scrutiny, and the Hang Seng Index had experienced four consecutive years of declines.
Today, the sentiment has significantly shifted. Hong Kong recently hosted a series of events, including conferences, the Art Basel fair, and the Rugby Sevens tournament, where banking and finance experts expressed confidence in the resurgence of China and Hong Kong.
The Hang Seng Index has surged by nearly 20% this year, outperforming the S&P 500 and Japan’s Nikkei 225. Companies like Alibaba, Xiaomi, and BYD have seen substantial stock gains. Investment firms on Wall Street are revising their outlook on Chinese shares, citing positive policy developments from Beijing and the potential for innovation following the introduction of DeepSeek.
At the HSBC Global Investment Summit in Hong Kong, Franklin Templeton CEO Jenny Johnson endorsed investing in the world’s second-largest economy. Frederic Neumann, HSBC's chief Asia economist, noted the remarkable shift to a more optimistic stance and heightened interest in China.
Hong Kong Exchanges and Clearing CEO Bonnie Chan highlighted the change in investor perceptions at the HSBC event, noting that just a year ago, many viewed Chinese stocks as unattractive, but sentiment shifted in September, leading to increased investments in Hong Kong and China.
Hong Kong's stock exchange is now attracting significant IPOs from Chinese companies, with Tesla supplier CATL recently receiving approval for a $5 billion IPO. This will be the largest listing in the city since 2021.
The rally in China’s stock market gained momentum with the introduction of DeepSeek's advanced AI model in January, creating a seismic shift that boosted the value of Chinese tech stocks while causing significant losses in U.S. tech stocks.