The rotation highlights a shift in sentiment for regional heavyweights. Alibaba Group led the charge with a 12% jump, its strongest showing in nearly a year, while Baidu and Tencent Holdings rose 6.3% and 3.8% respectively. Investors are pivoting toward these under-owned Chinese internet stocks, which currently trade at significant discounts compared to their historical valuations despite their year-to-date losses.

Saxo Markets strategist Charu Chanana noted that while the appetite for AI remains, capital is gravitating toward more efficient, lower-cost models rather than the capital-intensive infrastructure favored in the U.S. This narrative gained momentum following reports that Chinese developer DeepSeek is exploring independent chip production. Nomura analyst Jialong Shi pointed to growing recognition of Alibaba’s cloud-based AI potential as a secondary catalyst for the rally.

Despite the sudden enthusiasm, market watchers urge restraint. A durable recovery for Hong Kong remains tethered to upcoming earnings reports and broader global liquidity conditions. For now, the rebound functions as a portfolio reallocation rather than a confirmed structural shift.