Shares rally on investor AI optimism

Chinese mainland and Hong Kong shares jumped on Wednesday as investors are optimistic that an AI boom will lift the nation's economic growth, analysts said.

The Shanghai Composite Index, an A-share market benchmark, gained 1.02 percent to close at 3380.21 points, snapping a two-day decline.

Tech shares, especially semiconductor firms, were among the best performers, with the STAR 50 Index, which tracks Shanghai's sci-tech innovation board, climbing 2.17 percent to close at 1126.82 points.

Hong Kong's Hang Seng Index surged 3.27 percent to 23787.93 points, while the Hang Seng Tech Index soared 4.47 percent to 5953.79 points, a three-year high.

Chinese mainland stocks have been on a tear this year, continuing their strong performance that began later in 2024, said Kristina Hooper, chief global market strategist at Invesco, a global investment management company.

Hooper said the rally was initially driven by stimulus from Chinese policymakers and has lately been largely spurred by excitement around DeepSeek's AI advances.

"Chinese stocks have had attractive valuations for years, but the appearance of these important catalysts has made the difference. Chinese stocks, especially Chinese tech stocks, could have a long runway," Hooper said.

On Wednesday, the National Financial Regulatory Administration and the National Development and Reform Commission held a symposium on the pilot program for equity investment by financial asset investment companies.

Emphasizing the importance of expanding the pilot program for bolstering technological innovation and serving private enterprises, the meeting said the goal is to mobilize more social capital to support technology-driven enterprises.

The NFRA also said that it will ease the qualifications for offshore financial institutions to hold stakes in onshore insurance companies.

Effective March, the requirement that Hong Kong and Macao financial institutions must have total assets of no less than $2 billion as of the end of the most recent year to hold stakes in mainland insurance companies, will no longer be enforced.

Ouyang Shijia contributed to this story.