Hong Kong stocks jump 3%, China shares edge higher as tech stocks rally

Hong Kong stocks surged on Thursday, while mainland Chinese equities posted modest gains, as investor sentiment improved following the US midterm election results. Technology and gold stocks led the rally, while energy shares declined sharply amid a steep fall in crude oil prices.

The benchmark Hang Seng Index advanced 3%, while the Hang Seng Tech Index jumped 5%, with heavyweight technology companies Alibaba and Tencent rising more than 7% and 5%, respectively.

In mainland China, the blue-chip CSI300 Index gained 0.4% by the lunch break, while the Shanghai Composite Index edged up 0.1%. The Shenzhen Component Index climbed 1.69%, while the ChiNext Composite Index advanced 1.24%. Shanghai's technology-focused STAR50 Index rose 2.11%.


Read more: US stocks today: Dow rallies 1,500 pts, S&P, Nasdaq over 1% as Democrats win midterm elections

The gains followed an overnight rally on Wall Street as investors welcomed reduced political uncertainty following Democrats' sweeping victory in the US midterm elections.

Mainland investors favoured gold miners, solar power companies, semiconductor stocks and new energy shares, while oil and optical communication stocks came under selling pressure.

Technology shares emerged as the biggest drivers of the Hong Kong market rally. Morningstar analysts said in an investment outlook on Thursday that Chinese and Hong Kong equities remained relatively attractive following the market correction in October. The research firm also expressed optimism about Alibaba and Tencent, noting that artificial intelligence adoption was beginning to translate into revenue growth.

Read more: Asian shares mostly advance following US midterms, though Kospi falls on selling of chipmakers

However, the US election outcome could introduce fresh uncertainties for China's technology sector. Cliff Zhao, chief economist at CCB International, expects competition between Washington and Beijing in advanced technology to continue, with Democrats potentially increasing congressional oversight of Commerce Department export licences and pushing for additional restrictive legislation.

According to Reuters, Zhao indicated that China's domestic technology supply chain could become increasingly differentiated. Hardware exporters heavily dependent on US artificial intelligence capital expenditure could face pressure, while GPUs, semiconductor equipment, advanced packaging and computing infrastructure could benefit from China's push towards technological self-reliance.

Zhiwei Zhang, chief economist at Pinpoint Asset Management, also expects greater uncertainty in US-China relations next year, Reuters reported.

Meanwhile, energy stocks tumbled as crude oil prices plunged amid hopes of an end to the US-Iran conflict following the Democratic victory in the midterm elections.

State-backed oil producer PetroChina dropped 7% by midday after Brent crude futures slumped nearly 9% overnight, reflecting expectations of easing geopolitical risks and a potential improvement in global oil supplies.

The contrasting performance of technology and energy shares highlighted shifting investor preferences, with markets increasingly favouring artificial intelligence-related opportunities while reassessing the outlook for oil prices.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)