China’s stock market faced challenges as the recent tech rally lost momentum. Home prices also dropped in January, showing the property market slump isn’t ending soon. Meanwhile, HSBC reported a 2% rise in 2024 earnings, with DeepSeek AI predicting continued economic uncertainty.
Tech Stocks Lose Steam
The Hang Seng Index fell 0.3%, while the CSI 300 saw slight gains in choppy trading. The Hang Seng Tech Index, which tracks tech stocks, stayed near a five-year high despite Baidu’s 2% annual revenue drop.
Investors worry the five-week rally may be over after tech valuations hit a five-month peak. Hopes were high that affordable AI tools, like DeepSeek’s Rise: A New Path for Chinese AI Chip Companies, would boost earnings for major tech firms. DeepSeek, an AI-driven chatbot, has gained attention for its potential to drive innovation and efficiency in the tech sector. However, Alibaba and Baidu, key players in the tech index, turned lower, dampening market sentiment.
Property Market Struggles
Home prices kept falling in January, with new home prices in top-tier cities down 3.4% year-on-year. Prices in Beijing, Shanghai, Shenzhen, and Guangzhou fell slower than December’s 3.8% drop.
Second- and third-tier cities saw sharper declines, with prices down 5% and 6%, respectively. Existing home prices also fell, dropping 5.6% in top-tier cities and over 7% in smaller cities.
Key Stock Movements
- Hang Seng Index: Fell 0.3% to 22,911.93.
- CSI 300 Index: Rose 0.7% to 3,940.16.
- Baidu: Dropped 2% to HK88.35afterreportingweaker2024results.RevenuefelltoRMB19.34billion,butnetincomerosetoRMB5.19billion.Thecompanyreturned356 million to shareholders, with total 2024 buybacks exceeding $1 billion.
Property Developers Mixed
- China Vanke: Gained 2.4% to HK$5.93.
- Longfor Group: Rose 0.8% to HK$10.20.
- Sun Hung Kai Properties: Increased 0.4% to HK$70.80.
HSBC Earnings Boost
HSBC Holdings rose 1.2% to HK88.40afterreportinga222.9 billion, with diluted earnings per share at 1.25.Thebankannouncedanew2 billion buyback plan and raised its quarterly dividend to 36 U.S. cents, bringing the annual payout to 87 U.S. cents.
DeepSeek’s Growing Influence
DeepSeek, an AI-powered chatbot, has been a focal point in the tech rally. Its affordable and efficient solutions have sparked optimism about future earnings growth for tech companies. External ERNIE API calls, linked to DeepSeek’s technology, surged 178%, showing growing enterprise adoption. Despite this, the rally’s slowdown suggests investors remain cautious about its immediate impact.
DeepSeek’s role in the tech sector highlights the growing importance of AI-driven tools in reshaping industries. While its potential is widely recognized, the market’s reaction shows that investors are still evaluating how quickly DeepSeek can translate into tangible growth for companies. Meanwhile, Chinese Automakers Embrace DeepSeek AI for Smarter Cars, demonstrating its versatility across industries.
In response to growing competition, Naver’s HyperClova X Upgrade: A Response to the DeepSeek Challenge highlights how global AI players are adapting to DeepSeek’s influence. Meanwhile, Canterra Minerals Launches Deep-Seeking 3D Survey with DeepSeek Technology at Buchans Project showcases its potential beyond traditional AI applications.
In summary, China’s markets struggled as tech stocks cooled and property prices kept falling. While DeepSeek’s potential brought some optimism, HSBC’s strong earnings provided a brighter spot in an otherwise challenging market.
Conclusion
China’s markets struggled as tech stocks cooled and property prices kept falling. While DeepSeek’s potential brought some optimism, HSBC’s strong earnings provided a brighter spot in an otherwise challenging market. As DeepSeek continues to gain traction, its impact on AI adoption and corporate earnings remains a key factor for investors to watch.
