Further upside expected for Hang Seng Tech Index
THE Hang Seng Tech Index, which tracks Hong Kong’s 30 largest listed technology companies, has continued its bullish momentum since a significant breakout above the 5,500 level in mid-July this year due to several factors.
Firstly, technology heavyweights Alibaba and Baidu have spearheaded a rally in the index, reigniting investor optimism over artificial intelligence (AI).
Baidu released an upgraded version of its AI reasoning model X1.1, claiming significant enhancements in capabilities with performance surpassing that of DeepSeek-R1, as well as matching those of OpenAI’s GPT-5 and Google’s Gemini 2.5 Pro.
Meanwhile, Alibaba introduced its Qwen3-Max-Preview model, featuring more than one trillion parameters. The company claimed that the model was its largest and most advanced model to date, outperforming its previous flagship model, Qwen3-235B.
In addition, following Alibaba’s recent earnings release, reports suggested that the company is developing an in-house AI processor to reduce reliance on US-made chips from Nvidia.
Secondly, Hong Kong equities also rose amid hopes that China will cut interest rates after consumer prices fell further, alongside expectations of a US Federal Reserve rate cut.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Statistics showed that consumer prices in China dropped 0.4 per cent year on year in August, registering the first decline in three months, based on data from the country’s National Bureau of Statistics on Sep 10. This was steeper than the consensus estimate of a 0.2 per cent decrease.
The weak inflation data underscores sluggish domestic demand, bolstering the case for the People’s Bank of China to lower borrowing costs.
From a technical perspective, the Hang Seng Tech index appears poised for further gains in the current rally. Since June, the index has been trading in an uptrend channel, with pullbacks finding support at the 50-day simple moving average, which is indicative of a medium-term uptrend.
In addition, the price has held the previous horizontal resistance at the 5,500 level as support since the breakout in mid-July. With a breakout above the 5,800 resistance level, which has held since the end of July, the index is on track to retest the 6,195 level formed at the beginning of March this year.
Moreover, the Moving Average Convergence Divergence technical indicator has held above the zero line consistently since June, which suggests upward momentum for the tech index.
In conclusion, renewed investor optimism over AI, driven by new developments from tech heavyweights and hopes for interest-rate cuts amid sluggish consumer prices, have contributed to the Hang Seng tech index’s rally.
Bullish technical signals currently present for the index are likely to drive further upside, with the next target level at 6,195 points to retest the year-to-date highs.
The writer is senior research analyst at Phillip Securities Research
Copyright SPH Media. All rights reserved.
