AI rally 'will drive HK stocks to 25,000 mark'

Cici Cao and agencies

Stocks related to artificial intelligence are expected to outperform the market in Hong Kong this year, an analyst says.

But increasingly complex US tariffs might spoil the party, another warns.

Chipmakers, AI models and telecoms will be a key focus in 2025, said Kenny Ng Lai-yin, a securities strategist at Everbright Securities International.

He expects AI-related stocks will drive Hong Kong's benchmark Hang Seng Index to 25,000 points this year with tech stocks rising more than other sectors.

Ng believes concerns over US tariffs have been priced in and expects market sentiment improve.

However, Francis Kwok Sze-chi, the vice chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators, warns that the tariffs could dampen the market's recent momentum.

He expects tariff wars to become increasingly complex and lead to a significant decline compared to the current upward trend in the market.

The recent gains are due to the market recognizing the investment capacity in AI stocks, instead of an improving real economy, he said.

The HSI has risen nearly 5 percent in the first trading week in the Year of the Snake amid the euphoria over China's AI star DeepSeek which has amassed over 22 million daily users in only 21 days after its launch, 41 percent of the total number on OpenAI's ChatGPT.

The predictions come amid the news that US President Donald Trump plans to announce reciprocal tariffs on many countries by today or tomorrow.

Peter Navarro, the US president's senior counselor for trade and manufacturing, said China and India will be the top priorities for the negotiation if the US Reciprocal Trade Act that Trump called for in 2019 were enacted.

Meanwhile, Trump has paused imposing tariffs on small-value packages from China, leaving federal agencies time to build an appropriate system to adequately and efficiently process and collect tariff revenues.