Year-to-Date, the Hang Seng Index$HSI(HSI)$ has surged by 15%, the Hang Seng Tech Index $HSTECH(HSTECH)$ $HSI(HSI)$ $CSOP HS TECH(03033)$ by 27%, and Alibaba$Alibaba(BABA)$ $BABA-W(09988)$ has skyrocketed by 47%! What's driving these gains, and what should we anticipate next?
Here's a quick update:
1. Investor Sentiment on Chinese Tech: Global Tech Investor has been heavily questioned by Deepseek, but I'm not here to debate AI superiority. The market's response is clear, with many investors beginning to take positions in Chinese tech. I believe there's still room for more hedge funds to enter, signaling that Chinese tech stocks are in a phase of re-evaluation compared to their American counterparts.
2. Domestic Chip Preference: In December 2024, Chinese industry groups advised against using US chips, citing safety concerns without providing evidence ( they will not make such statements if they have no weapons in the Arsenal). I anticipate China will make significant strides towards AI and chip self-sufficiency this year.
3. Upcoming National Congress: The "Two Sessions" on March 5th, 2025, are expected to announce new stimulus measures. Discussions on trade wars and tech competition strategies will likely be key, marking this as the next major catalyst for the market.
4. Alibaba's Earnings: I'm not expecting any surprises in Alibaba's earnings on February 20th, but their forward guidance and narrative on AI development will be critical to watch.
Lastly, here are some key indicators to consider watching:
1. HSTECH:HSI Ratio: After 1099 days of consolidation, this ratio suggests a tech sector breakout.
2. AH Premium: Current indicators suggest a possible correction coming, especially as the RSI becomes oversold. However, if we're truly in a re-evaluation phase, we might see the AH Premium RSI remain extremely oversold before any significant correction occurs.
PS: My views are bullish and I am biased because I am heavy Chinese Stocks.
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