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What’s happening: Hong Kong stocks rose steeply on Wednesday amid a rally in Chinese AI stocks.
What happened: Markets shrugged off concerns around President Donald Trump’s erratic moves and a potential China-US trade war.
Investors abandoned US tech majors and flocked to Chinese tech stocks listed in Hong Kong, following the Financial Secretary’s budget announcement.
Why it matters: Hong Kong’s Financial Secretary Paul Chan announced the annual budget on Wednesday. Chan revealed plans to cut government spending by slashing 10,000 civil service jobs in view of the region’s rising deficit.
The Financial Secretary also announced plans to give a big push to artificial intelligence, earmarking HK$1 billion ($128.65 million) for an AI Research and Development Institute. The plans are aligned with the Chinese government’s aim of achieving self-reliance in AI, robotics and other high-end technologies.
Market sentiment was further lifted by Hong Kong reporting GDP growth of 2.4% year-on-year in the fourth quarter of 2024. The figure marks a significant acceleration from the 1.8% growth reported in the previous quarter.
Shares of ecommerce giants Meituan, JD.com and Alibaba surged 10.47%, 9.03% and 6.05%, respectively, on Wednesday. All three companies have invested heavily into AI.
Semiconductor Manufacturing International’s stock spiked 5.90%, while Xiaomi rose by 5.83%.
EV stocks also recorded gains, with shares of Xpeng up 9.34% and Li Auto climbing 1.59%, after the company unveiled its first all-electric SUV.
Meanwhile, the top US stocks mostly ended Wednesday’s trading session in the red. Shares of Tesla tanked 3.96%, Apple lost 2.70% and Google-parent Alphabet was down 1.51%. Shares of Amazon and Microsoft settled almost flat.
The Hang Seng Tech index, which represents the 30 largest tech companies listed in Hong Kong, climbed 4.47% to close at 5,953.79 on Wednesday. The main Hang Seng index rose 3.27% to settle at 23,787.93.
What to watch: Investors will continue monitoring announcements by the Trump administration. Hong Kong’s retail sales data, scheduled to be reported on Monday next week, will also remain in focus. The city’s retail sales had contracted by 11.5% year-on-year in December, after declining by 8.4% in the previous month.
Context: Shares of Nvidia dipped in after-hours trading, following the company’s fourth-quarter results.
Details: Nvidia’s quarterly revenues grew by 78% year-on-year to a record high of $39.3 billion. The figure smashed consensus estimates of $38.08 billion.
The beat was driven by the company’s datacentre revenues, which climbed 93% year-on-year to $35.6 billion. However, gaming revenues contracted by 11% year-on-year in the fourth quarter.
Earnings came in at 89 cents per share, up 82% from the same quarter a year ago and surpassing Wall Street expectations of 85 cents per share.
Management guided to revenues of $43 billion for the first quarter. Although this represents 65.4% year-on-year growth, it marks a significant slowdown from the 262% growth recorded in the same quarter in the previous year.
The company also announced its gross margin guidance at a whopping 70.6% for the first quarter. However, it projected an increase in operating expenses to $5.2 billion.
Shares of Nvidia have climbed steadily through most of February in anticipation of blockbuster quarterly results. The stock, which had suffered a blow in January after the launch of the DeepSeek-R1 model, has added almost 11% over the past month.
Following the results that came in after markets closed on Wednesday, Nvidia’s shares declined by 1.49% to $129.32.
What to watch: Investors will continue monitoring reports of the Chinese government’s initiatives to boost tech companies.
Other Markets: US trading indices closed mostly higher on Wednesday, with the Dow Jones index down 0.43% and the S&P 500 and Nasdaq 100 up by 0.01% and 0.26%, respectively.
The Italian Prime Minister said the draft deal between the US and Ukraine does not include any security guarantees, which are critical for continued peace. The news sent the RUB/USD pair lower in forex trading this morning.
Taiwan’s consumer confidence index rose slightly to 72.59 in February, from 72.54 in the previous month. The figure remaining at the lowest level since May 2024 exerted pressure on the TWD/USD forex pair.
Australia’s total new capital expenditure unexpectedly contracted by 0.2% in the fourth quarter of 2024, following a 1.6% expansion in the previous quarter. The figure significantly missing market expectations of 0.8% growth sent the AUD/USD pair sharply lower in forex trading this morning.
New Zealand’s business confidence climbed to 58.4 in February, from the 5-month low of 54.4 hit in January. Despite this being the first rise in four months, the NZD/USD forex pair remained under pressure.
Argentina’s retail sales grew 121.5% year-on-year in December. Although the figure beat expectations, it represented a slowdown from November’s 134.8% growth. The ARS/USD pair remained broadly flat in forex trading this morning.
Spain’s inflation rate (12:00 UAE Time), Sweden’s business confidence and consumer confidence (12:00 UAE Time), Switzerland’s GDP growth (12:00 UAE Time), Eurozone’s loans to companies and loans to households (13:00 UAE Time), Iceland’s inflation rate (13:00 UAE Time), Italy’s business confidence and consumer confidence (13:00 UAE Time), Poland’s GDP growth (13:00 UAE Time), Portugal’s business confidence and consumer confidence (13:30 UAE Time), South Africa’s PPI (13:30 UAE Time), Cyprus’ industrial production (14:00 UAE Time), Eurozone’s economic sentiment and consumer confidence (14:00 UAE Time), Italy’s industrial sales (14:00 UAE Time), Belgium’s inflation rate (14:30 UAE Time), France’s unemployment benefit claims (15:00 UAE Time), Brazil’s current account (15:30 UAE Time), Brazil’s unemployment rate (16:00 UAE Time), Mexico’s balance of trade and unemployment rate (16:00 UAE Time), Canada’s current account and average weekly earnings (17:30 UAE Time), US durable goods, GDP growth and initial jobless claims (17:30 UAE Time) and US pending home sales (18:00 UAE Time).
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