Staff reporter and agencies

Hong Kong stocks surged 563 points to hit a more than four-month high, led by a rally in Alibaba (9988) shares after its reportedly partnership with Apple.

The benchmark Hang Seng Index closed at 21,857, up 2.64 percent. The market turnover was HK$287.16 billion, the highest since October 10 last year.

The Tech Index rose by 2.7 percent, closing at 5,281.

The top traded stock was Alibaba, with a turnover of HK$24.16 billion, after The Information reported that Apple is partnering with the China e-commerce giant to roll out artificial intelligence features for iPhone users in China.

Alibaba's share price surged by about 8.5 percent to HK$113.80.

BYD (1211) surged to a new record of HK$352, ending over 7 percent higher, reflecting optimism that the Chinese electric vehicle leader will challenge the likes of Tesla with its smart-driving strategy.

BYD Electronic (0285) also gained nearly 10 percent.

Shares of China Vanke (2202), which will reportedly secure government aid to plug a funding gap of some 50 billion yuan (HK$53.28 billion), once surged by as much as 18.6 percent to HK$6.45 before closing at HK$6.35.

Other property stocks rallied with Sunac China (1918) soaring 20.8 percent and Shimao (0813) surging by 15.7 percent.

In China, the Shanghai Composite Index closed at a new high for the year, reaching 3,346 points, while the Shenzhen Component Index gained up 151 points to 10,708 points.

China's AI-driven stock rally is drawing support from Wall Street strategists, who say the newfound tech prowess will help extend a bull run.

Morgan Stanley strategists including Laura Wang expect the momentum to sustain in the near-term given global investors' light positioning."

Based on the experience during the 4G, 5G and cloud computing eras, "it would seem that we are less than halfway through the rally" driven by DeepSeek, UBS strategists including James Wang wrote in a note.

In other news, Semiconductor Manufacturing International (0981) would not voluntarily reduce prices and plans to unveil new products amid a fierce price war, said co-chief executive Zhao Haijun said.

Also, MSCI will axe 20 stocks from the MSCI China Index, following more than 200 removals last year, underscoring the market's diminishing appeal among investors despite a recent rebound.

The HSI surged 563 points. SING TAO

Alibaba-fueled rally sends stocks toward 22,000 mark