Chinese tech stocks surge as market anticipates bullish trend

On February 7, 2025, Asian shares showed mixed results amid fluctuating market conditions. In Japan, the Nikkei 225 saw a slight decline of nearly 0.44% during early trading, reaching 38,893.65. Similarly, the S&P/ASX 200 in Australia dipped just 0.04% to settle at 8,517.20, while South Korea's Kospi decreased by 0.23% to 2,530.79. Contrasting this trend, Hong Kong's Hang Seng index rose by 1.35% to 31,173.35, supported by gains in the Shanghai Composite, which was up 1.33% to 3,314.29. This environment, particularly favorable for Chinese technology stocks, is fueled by a renewed interest stemming from AI models released by DeepSeek that sparked optimism among investors. Specifically, in Hong Kong, notable stocks like Xiaomi, Alibaba, and Tencent experienced significant increases, with Xiaomi's shares rising by 5.67% and Alibaba's stock jumping 1.47%. Tencent, recognized as China's largest video game firm, soared by 1.90%. The advancements in technology stocks are showcasing a potential transition into a bull market phase, indicating a positive response from market players. This bullish sentiment stands in stark contrast to the overall downtrend observed across many Asian equities. The mixed performances across different markets arise amid home-grown weaknesses and external pressures impacting sentiment across the region. In Japan, expectations of continued economic tightening are influenced by a stronger yen and household spending data, which has prompted discussions about potential rate hikes from the Bank of Japan. Market strategist Yeap Jun Rong highlighted that both headline and core inflation rates have been climbing, reinforcing the central bank's need for a proactive approach to managing inflationary pressures. Concurrently, in the U.S., markets are adjusting to the ramifications of tariffs introduced by President Donald Trump, with 10% tariffs now applied to Chinese products, while tariffs for Mexican and Canadian goods have been momentarily paused. This strategic maneuver appears to lessen immediate fears of a global trade war, though tensions remain as retaliatory actions from China include imposing tariffs on U.S. coal and liquefied natural gas. This backdrop of geopolitical strife and economic maneuvering contributes to an overall cautious atmosphere within global markets, overshadowing the otherwise positive developments in certain sectors like Chinese technology stocks.