Alibaba drives Hong Kong shares higher, China stocks steady

Hong Kong shares rose on Wednesday, led by a rally in Alibaba shares, as the market was fuelled by AI-driven revaluation opportunities. China stocks were roughly flat.

** China's blue-chip CSI300 Index edged down 0.1% by the lunch break, while the Shanghai Composite Index were flat. Hong Kong benchmark Hang Seng was up 1.4%.

** Alibaba's Hong Kong shares surged 6.7%, hitting a four-month peak on Wednesday, after the Information reported Apple is partnering with the Chinese tech giant to roll out artificial intelligence features for iPhone users in China.


** Baidu shares fell 3.5%. Apple had selected Baidu as its main partner last year, but the Chinese company's progress in developing models for Apple Intelligence fell short of its standards, the report said.

** Tech major traded in Hong Kong rose 1.2%, with Lenovo Group and BYD Electronic up 4.6% and 6.2%, respectively.

** "Technology fuelled rallies typically saw share prices rise ahead of earnings and this year, with ample liquidity and lower interest rates, we see valuation re-rating opportunities ahead for AI-related names," said UBS strategist James Wang.

** "The internet companies are likely to be longer-term beneficiaries of cheaper AI models and remain attractive given the cheap valuation and capital return initiatives on offer," Wang said.

** AI-shares traded onshore were up 0.9%, outperforming other sectors.

** Global investors are starting to reassess China's investability within the tech and AI space, as U.S.-China competition has expanded from trade or tariffs to high-end manufacturing and AI, said equity strategists at Morgan Stanley.

** Shares of Chinese bubble tea maker Guming were roughly flat on the Hong Kong Stock Exchange trading debut after the company raised $232 million in an initial public offering.