Hong Kong stock concept tracking | Hang Seng Technology Index enters a "technical bull market" Securities sector ready to take off (with concept stocks)

On February 7th Beijing time, the Hang Seng Tech Index rose 2.8% at midday, up more than 20% from its low point in January. Due to the launch of DeepSeek, an open-source AI model that rivals OpenAI's large model o1 in performance but with much lower training and inference costs than OpenAI, global investors have become enthusiastic about Chinese internet companies and leaders in the Chinese semiconductor and software industries. As a result, the benchmark index of Chinese technology stocks trading on the Hong Kong stock market - the Hang Seng Tech Index - has entered a "technical bull market". In the A-share market, the ChiNext, which covers many technology stocks, surged over 3% by Friday morning close, with a weekly increase approaching 7%. The index has been in a period of consolidation since October, but has experienced a significant rebound recently following the excitement around Chinese technology stocks sparked by DeepSeek. HSBC stated that the development of the Chinese AI startup DeepSeek has attracted global attention, confirming once again China's underestimated continuous innovation capability. With investors becoming increasingly aware of this innovation, HSBC believes that the valuation gap between China and emerging markets will narrow and foreign capital inflows will rise. A-share technology companies may benefit from policy support, but the necessary link is that China's innovation has not yet translated into higher profitability, which can only be resolved through demand-side stimuli. HSBC believes that as AI becomes cheaper, the development of DeepSeek can catalyze the rotation of upstream AI companies to downstream companies. This shift has already occurred in the US market, however, the strong performance of AI/technology downstream companies will depend on the strength of demand and product quality. Deutsche Bank stated that 2025 will be the year when the investment community realizes that China is surpassing other countries in the world; the bull markets in the Hong Kong and A-share markets began last year, and it is expected that they will exceed their previous highs in the medium term. Investors will pay for China's leadership, and it is expected that the discount on Chinese stocks will disappear. Due to factors such as policies favoring consumption, it is believed that the profitability of Chinese companies will bring surprises. China's technological achievements are underestimated by investors; DeepSeek is like China's Sputnik moment, and its intellectual property has been recognized. For investors who like companies with strong "moats", it cannot be ignored that Chinese companies have broad and deep moats, unlike Western companies. Zhongtai released a research report stating that core measures of policies to attract long-term funds into the market include increasing the actual investment ratio, extending the evaluation period, and supporting measures. Currently, there is still significant room for long-term funds to enter the market, promoting the inflow of long-term funds, which is beneficial for the stability of the market's financial side and gradually forms a positive feedback loop between funds and assets. CMSC stated that policy-driven funds are eagerly entering the market, with a clear policy attitude and actual increase in incremental liquidity expected to drive the equity market into a positive cycle of "index upward trend-earnings effect enhancement-capital inflow", which is expected to provide strong catalysts for the brokerage sector. Hong Kong-listed brokerage sector related stocks: HKEX (00388) Chinese brokerage sector: CMSC(06099), CITIC SEC(06030), CICC(03908), Shenwan Hongyuan Group(06806), China Securities Co., Ltd. (06066), etc. Local Hong Kong brokerage: Guotai Junan International (01788), Shenwan Hongyuan Group Hong Kong (00218), BRIGHT SMART (01428), etc.