Anticipation is mounting around the meeting between President Xi Jinping and e-commerce titan Jack Ma, coinciding with a strong run in Chinese tech stocks. Investors are keen to see if this encounter could catalyze further gains in the market, potentially extending the current rally.
Leading entrepreneurs, including Ma, have met with Chinese President Xi Jinping and other high-ranking officials on Monday. Sources had earlier characterized this meeting as a strategic attempt to foster a more positive environment for private businesses.
Meanwhile, the emerging backing for the private sector is parallel with the recent upsurge in Hong Kong’s stock market, propelled by the expanding prowess in artificial intelligence.
The Hang Seng China Enterprises Index continued its surge on Monday after topping a record high since February 2022 last Friday, with the index soaring as much as 1.7% before subsiding.
Earlier this month, a technology index in Hong Kong surged into a bull market, powered by the groundbreaking AI model developed by the Chinese startup DeepSeek, which has been acclaimed as a game-changing innovation.
Robert Lea, Bloomberg Intelligence analyst, remarked that the endorsement from Chinese leaders sent a strong message in support of tech sectors as the beating heart of China’s economic growth.
Among the heads of the advance in the index is Alibaba Group, which saw its share rise 60% since 13 January, followed by Tencent Holdings with a 7.8% gain on Monday after the company revealed that it was implementing DeepSeek’s AI chatbot into the WeChat messaging app.
While some investors express concerns about the crowded and extended nature of the rally, President Xi’s endorsement could potentially instill a renewed sense of confidence in the $16 trillion Chinese and Hong Kong stock markets, which have been on a steady incline since mid-January.
Nenad Dinic, an equity strategist at Bank Julius Baer, said that the talks align with the bank’s expectation of a short-term trading opportunity, rather than a sign of a structural reform.
Nonetheless, in the absence of new drivers such as earnings reports, shifts in liquidity, or indications of policy changes, the likelihood of a market downturn is on the rise.
The meeting between President Xi Jinping and Jack Ma would communicate a strong message about the nation’s attitude towards private enterprises, potentially indicating a shift towards a more favorable environment for private sector growth and entrepreneurship.
