[ET Net News Agency, 27 January 2025] Before the Lunar New Year, Hong Kong stocks
continued to pay. The emergence of the DeepSeek concept ignited AI and tech stocks,
driving the Hang Seng Index to 20,259 at midday, up by 193 points or 1%, with the main
board turnover exceeding HKD 80.9 billion. The Hang Seng China Enterprises Index reported
7,404, up 92 points or 1.3%. The Hang Seng Tech Index reported 4,722, up 64 points or
1.4%.

"Nip Chun Pong: If the Hang Seng Index stabilizes above 20,300, it is expected to continue
rising"

The Hang Seng Index surged by over 300 points last Friday, closing above the 20,000
mark. This morning, the market continued the upward trend from the end of last week, but
turned around near 20,300. Nip Chun Pong, the Chief Strategist at Blackwell Global
Securities, told ET Net News Agency that the recent rise in the Hang Seng Index is mainly
due to the U.S. tariffs on China being lower than expected, and lower than the earlier
proposed 25% tariff rate on Canada and Mexico, the other two major trading partners.
Compared to the tariff rates imposed by Trump on China during his first presidential term,
this time is relatively mild. Additionally, Trump mentioned in Davos, Switzerland, that he
could reach an agreement with China on fair trade practices and would prefer not to impose
tariffs on China, which the market interpreted as a dovish stance on China, easing
concerns about U.S.-China trade frictions.
However, Nip Chun Pong pointed out to watch out for recent fluctuations in global stock
markets. The three major U.S. stock indexes fell last Friday, and Nasdaq futures dropped
nearly 400 points during the Asian trading session this morning, indicating a possible
further decline in U.S. stocks tonight. As today is the futures settlement day, it is
expected that with support from major investors, the Hang Seng Index will have no
difficulty rising today, but the key is whether it can rise above 20,300. If the Hang Seng
Index can close above this level today, it is expected to continue to rise in the future;
otherwise, a potential correction cannot be ruled out.

"Mainland China unveils large language model, speculation in AI-related stocks"

Reports indicate that the Chinese AI company DeepSeek released the open-source large
language model DeepSeek V3 and the official version of DeepSeek-R1, with the model ranking
first in the free download list in the China region of Apple App Store on the 27th.
Analysis suggests that its performance is comparable to OpenAI's GPT-3 and even surpasses
Meta's Llama, but at a much lower cost, with rumours circulating that the development cost
of this AI was only USD 5.5 million. An anonymous post by a Meta employee on the workplace
platform Teamblind mentioned that after the release of DeepSeek's model, the company is
now in panic mode, not only due to DeepSeek's excellent performance but also because of
its extremely low cost and team composition.
Similarly, Meta CEO Mark Zuckerberg expects Meta to invest USD 60 to 65 billion in
AI-related capital expenditure this year, a 65% increase from around USD 38 to 40 billion
last year, surpassing analysts' expectations of around USD 51.3 billion in capital
expenditure this year. Zuckerberg hopes that Meta's AI can serve 1 billion people, with
40% of Llama becoming a leading large model in the industry, revealing that the company is
building a data centre of over 2GW+.
Today, AI-related stocks such as Baidu (09888) and SenseTime (00020) have generally
risen by 3% to 5%. In response, Nip Chun Pong stated that there has been speculation in
AI-related stocks since last week. Even though Mainland China AI companies have released
open-source large language models that outperform their US counterparts, it does not
provide significant assistance to other AI companies in the market. The market is simply
speculating on the concept of domestically developed AI technology. Taking SenseTime as an
example, the company held a product launch event in Hong Kong last year, and its stock
price was previously hyped up.
Baidu announced that its ERNIE Bot has a user base of 430 million, with the large model
being used 1.5 billion times daily. Nip Chun Pong pointed out that the recent rise in
Baidu's stock price is mainly attributed to the latest developments in ERNIE Bot. When
ERNIE Bot was first launched, the market had reservations about its performance due to the
initial version's subpar results, often leading to irrelevant responses. However, with
continuous improvements and innovations, ERNIE Bot's practicality has greatly improved.
Furthermore, the stock price of Baidu has fallen behind, with its high point last month
being above HKD 90 and recently even dropping below HKD 80, hence the stock price catching
up.
Nip Chun Pong further noted that as the hype around AI in the U.S. has been ongoing for
a while, there is currently an adjustment in stock prices. It is not excluded that some
investors will transfer funds to their counterparts in Hong Kong. Regarding the tech
giants that will have announcements this week, Nip Chun Pong is optimistic about Meta, as
the market expects Meta's revenue to increase by 17% year-on-year last quarter, and net
profit per share to rise by 26%, with the stock rising against the market trend last
Friday. Given their significant investment in developing artificial intelligence, it is
expected that the stock will continue to perform well.