Hong Kong stocks closed (02.21) | The Hang Seng Index rose nearly 4%, reaching a three-year high. The technology stocks surged, with Alibaba-W soaring 14% after earnings

According to Zhitong Finance APP, the Hong Kong stock market surged today, with all three major indices making strong gains. The Hang Seng Index soared over 900 points, reaching a three-year high, while the Hang Seng Tech Index rose over 6% at the close. By the end of trading, the Hang Seng Index was up 3.99% or 900.94 points, closing at 23,477.92 points, with a total turnover of HKD 393.598 billion; the Hang Seng China Enterprises Index rose 4.14%, closing at 8,666.72 points; the Hang Seng Tech Index increased by 6.53%, closing at 5,859.3 points. For the week, the Hang Seng Index gained a total of 3.79%, the China Enterprises Index rose 4.02%, and the Hang Seng Tech Index increased by 6.03%.

JP Morgan stated in a report that while it is difficult to predict how long the current AI-driven rally in Chinese internet stocks can last, it firmly believes that this will not just be a one-month phenomenon. The report noted, "The lessons we learned from the AI trading in the U.S. suggest that the valuation re-rating brought about by long-term disruptive fundamental developments may be lasting." Additionally, Morgan Stanley raised its target for the Hang Seng Index to 24,000 points by the end of 2025, an increase of 6%, and raised its target for the Hang Seng China Enterprises Index by 3% to 8,600 points.

Blue Chip Performance

Alibaba-W (09988) surged after its earnings report. By the close, it was up 14.56%, trading at HKD 138.5, with a turnover of HKD 44.458 billion, setting a historical high and contributing 329.31 points to the Hang Seng Index. Alibaba reported third-quarter earnings for the fiscal year 2025, with revenue of RMB 280.15 billion, an 8% year-on-year increase; net profit was RMB 46.434 billion, a 333% year-on-year increase. Alibaba Cloud's revenue returned to double-digit growth, and revenue from AI-related products maintained triple-digit growth for six consecutive quarters. Eddie Wu also stated that investments in cloud and AI infrastructure over the next three years are expected to exceed the total of the past decade.

In other blue-chip stocks, China Unicom (00762) rose 15.72%, closing at HKD 10.82, contributing 14.2 points to the Hang Seng Index; Lenovo Group (00992) increased by 15.45%, closing at HKD 13.6, contributing 23.02 points; China Shenhua (01088) fell 2.73%, closing at HKD 28.5, dragging down the Hang Seng Index by 4.25 points; Hang Lung Properties (00012) decreased by 2.61%, closing at HKD 20.55, dragging down the Hang Seng Index by 1.24 points.

Popular Sectors

On the market, large technology stocks all surged, with Alibaba rising over 14% after its earnings report and Tencent increasing by over 6%. Alibaba's capital expenditure greatly exceeded expectations, and a new wave of AIDC investment construction is expected to begin, leading to significant gains in cloud computing stocks and DeepSeek concept stocks. Weishi Jiajie surged over 40%, and Tuya Smart rose over 30%; chip stocks performed strongly, with Hua Hong Semiconductor rising over 9% and SMIC increasing nearly 8%, continuing to hit new highs; telecom stocks exploded, with China Unicom rising over 15% and China Telecom increasing by 12.75%, reaching new highs; biopharmaceutical stocks and large financial stocks also performed well. On the other hand, Chenming Paper was removed from the Hong Kong Stock Connect, with its stock price plummeting over 25%, leading the decline in paper stocks; coal stocks and gaming stocks showed weak performance.

1. Chip stocks led the gains. By the close, Hua Hong Semiconductor (01347) was up 9.21%, trading at HKD 40.3; ASMPT (00552) rose 8.43%, closing at HKD 77.15; Semiconductor Manufacturing International Corporation (00981) rose 7.86% to HKD 54.2; Shanghai Fudan (01385) rose 5.84% to HKD 21.75.

Alibaba CEO Eddie Wu stated that in the next three years, the group's investment in cloud and artificial intelligence infrastructure will exceed the total of the past ten years. Morgan Stanley believes that if Alibaba announces an increase in AI-related investments, it will further enhance the new order expectations for the entire data center industry. International companies like Microsoft have seen a significant increase in AI spending, with capital expenditures rising each quarter. If Alibaba's spending increases, it can also be inferred that other internet giants will increase their expenditures.

ShenGang Securities' research report pointed out that the expansion of domestic AI applications is expected to drive demand for data center computing power and intelligent edge hardware, maintaining a good level of prosperity in the domestic chip industry chain. Guotai Junan believes that the AI competition is intensifying, and the industry is accelerating its development, while chip manufacturing is currently the main bottleneck for China's AI industry, which is expected to gradually break through as the industry chain matures.

2. Cloud computing concept stocks explode. As of the close, VST Holdings (00856) rose 40.37% to HKD 8.31; Neway Group (01686) rose 25.75% to HKD 9.28; Alibaba-W (09988) rose 14.56% to HKD 138.5; GDS Holdings Limited (09698) rose 11.03% to HKD 48.3.

Alibaba's third fiscal quarter results greatly exceeded expectations, with quarterly capital expenditures reaching HKD 31.8 billion, an increase of 80% quarter-on-quarter. Eddie Wu stated at the earnings conference that Alibaba will actively invest in AI infrastructure construction, with expected investments in cloud and AI infrastructure in the next three years surpassing the total of the past decade. Institutions pointed out the significant opportunities in the AI cloud computing industry. All three major operators have connected to the DeepSeek model, and giants like Alibaba, Tencent, and Huawei have made new progress in AI, with capital expenditures in AI cloud computing expected to gradually increase.

In addition, Canalys data shows that in the fourth quarter of 2024, global cloud infrastructure service spending is expected to grow by 20% year-on-year, reaching USD 86 billion. For the entire year of 2024, cloud spending is expected to grow by 20%, increasing from USD 267.7 billion in 2023 to USD 321.3 billion in 2024. The rapid expansion of AI models has become the core driver of this growth, accelerating the popularity of cloud computing. Industrial Securities stated that with the boost in confidence regarding the growth potential of the domestic technology industry, as well as the empowerment of AI across various segments of the cloud computing industry and demand pull, the previous valuation logic of cloud computing overseas mapping is being fully restored. Considering the previous divergence of Chinese and American tech stocks, the valuation recovery of domestic cloud computing leaders is expected to continue to ferment.

3. Telecom stocks strong throughout the day. As of the close, China Unicom (00762) rose 15.72% to HKD 10.82; China Telecom (00728) rose 12.75% to HKD 6.72; China Mobile (00941) rose 3% to HKD 82.5.

Huatai Securities pointed out that the State-owned Assets Supervision and Administration Commission may establish a national data group to explore the commercialization of data resources, and combined with the recent connection of operators to DeepSeek, it has made two major outlooks for the future: from the operators' perspective, their massive quality data resources may bring monetization value; In terms of the operators' AI business, the data openness of operators can also help models like DeepSeek in training and iteration, potentially accelerating the commercialization process of AI in the future. The bank believes that the AI cloud computing and data businesses of telecom operators are both in an upward economic cycle, and the establishment of data groups will further strengthen this logic, suggesting attention to the three major operators.

4. Pharmaceutical stocks strengthen again. As of the close, BeiGene (06160) rose 11.2% to HKD 158.8; Kanglong Chemical (03759) rose 10.46% to HKD 19.22; Viva Biotech (01873) rose 10.42% to HKD 1.59; Zai Lab (09688) rose 9.88% to HKD 26.7.

Recently, the General Office of the State Council forwarded the "2025 Action Plan for Stabilizing Foreign Investment" from the Ministry of Commerce and the National Development and Reform Commission, promoting the orderly opening of the biopharmaceutical field. It supports qualified foreign-funded enterprises to participate in pilot projects for segmented production of biological products, accelerates the review of provincial pilot plans and quality supervision plans, promotes the optimization of resource allocation in the biopharmaceutical industry, and timely coordinates to solve difficulties encountered by enterprises during the pilot process. It also studies and improves the opening policies in the pharmaceutical field, facilitates the accelerated listing of innovative drugs, optimizes bulk purchasing of drugs, and further enhances the predictability of medical device product procurement.

In addition, several CRO companies are actively laying out AI. Kanglong Chemical announced that it has completed a controlling transaction with Haixin Zhihui. This transaction marks that Kanglong Clinical, through the integration of Haixin Zhihui's high-quality compliant patient data and AI technology platform, expands its provision of high-quality personalized patient management services. Guotou Securities stated that traditional CXO companies are adapting to industry development trends by laying out AI technology platforms to enhance the R&D efficiency of existing businesses and better empower their clients' drug development. As the application capabilities of AI technology in various stages of drug development continue to improve, the advancements in AI pharmaceutical technology of various CXO companies and the release of related new platforms may be worth looking forward to.

Popular Active Stocks

1. NetEase Cloud Music (09899) surges significantly. As of the close, it rose 18.05% to HKD 170.7.

NetEase Cloud Music released its annual performance for the year ending December 31, 2024, reporting revenue of RMB 7.95 billion, a year-on-year increase of 1.06%; profit attributable to equity holders of RMB 1.562 billion, a year-on-year increase of 112.69%; basic earnings per share of RMB 7.48. The group's gross profit margin rose from 26.7% in 2023 to 33.7%, and adjusted net profit soared from RMB 818.5 million in 2023 to RMB 1.7 billion in 2024, more than doubling.

2. Laopu Gold (06181) hits a new high. As of the close, it rose 17.1% to HKD 548.5.

Laopu Gold issued a profit warning, expecting a net profit of approximately RMB 1.4 billion to RMB 1.5 billion for the full year of 2024, a year-on-year increase of approximately 236% to 260% compared to the net profit of RMB 416 million in 2023. This is mainly due to the significant market advantages formed by the continuous expansion of the group's brand influence, leading to a substantial increase in overall revenue from existing stores; product innovation and iteration promote sustained revenue growth In addition, 7 new stores were added this year, and 4 stores were optimized and expanded, generating incremental revenue contributions.

3. Bilibili-W (09626) strengthened after earnings. As of the close, it rose 16.47%, reported HKD 180.3.

Bilibili announced its financial performance for the fourth quarter of 2024, with total net revenue of RMB 7.734 billion, an increase of 22% year-on-year; gross profit of RMB 2.788 billion, an increase of 68% year-on-year; net profit of RMB 88.9 million, turning from loss to profit year-on-year; adjusted net profit of RMB 452 million, also turning from loss to profit year-on-year. The average daily active users (DAUs) were 103 million, compared to 100.1 million in the same period last year.

4. Hong Kong Stock Exchange (00388) performed brilliantly. As of the close, it rose 7.08%, reported HKD 350.8.

Citigroup's research report pointed out that the development of AI has sparked investor enthusiasm for tech stocks, driving a surge in trading volume in the Hong Kong stock market. From the beginning of the year to date, the average daily trading amount of Hong Kong stocks has reached HKD 194 billion, far exceeding market expectations. As a major beneficiary of the warming market sentiment, the Hong Kong Stock Exchange is believed to continue to receive support from the recent AI boom, while the recovery of IPO activities is also beneficial to the Hong Kong Stock Exchange, and the prolonged high interest rates in the U.S. are expected to favor investment income.

5. Chenming Paper (01812) stock price plummeted. As of the close, it fell 25.84%, reported HKD 0.66.

The Shenzhen Stock Exchange announced this morning that the list of eligible securities for the Hong Kong Stock Connect has been adjusted and will take effect from February 21, removing Chenming Paper. Previously, Chenming Paper announced that trading of its A-shares and B-shares would be suspended for one day on February 20 and would resume trading with other risk warnings on February 21. Subsequently, the daily price fluctuation limit for its A-shares and B-shares was changed from 10% to 5%