The Hang Seng Tech Index continued its recovery rally on Wednesday, joining other global indices like the Nikkei 225 and the Shanghai Composite. The index, which tracks the biggest Chinese technology companies, rose to H$5,635, its highest level since February 2022. It has risen by about 90% from its lowest level in 2023. So, what’s driving the surge, and what next?
China boosts 2025 GDP forecast
The Hang Seng Tech Index has done well this year as investors embraced risk and moved to big technology companies.
This growth continued this week after Beijing announced its growth targets for the year. Officials now target a growth rate of about 5% even as the country embarked on a trade war with Washington. Donald Trump added more tariffs on the country as he seeks to attract more investments in the country.
China also lowered its Consumer Price Index (CPI) to about 2% fo the first time in two decades, while the fiscal deficit jumped to 4%, the highest level in over three decades. These numbers mean that Beijing is focused on stimulating growth this year.
China has also embarked on more activity that will boost the economic growth. It wil develop multiple open source models for artificial intelligence (AI) and to provide industrial subsidies to the country. Beijing is also working to boost the production capacity of the C919 aircraft.
Therefore, the Hang Seng Tech index is doing well as investors anticipate more government support and stimulus measures.
Chinese tech stocks are surging
The Hang Seng Tech Index, which is seen as China’s Nasdaq 100, has risen, helped by the performance of most of its constituent companies.
XPeng stock price surged by 73% this year and 117% in the last 12 months, making it the best-performing companies in the index. It has become one of the top EV stocks in China as it continued to boost its products and market share. Its most recent results showed that its growth momentum gained steam in the fourth quarter.
SMIC stock price has jumped by 68% this year and over 217% in the last twelve months as demand for Chinese semiconductors rose. It is doing well as many companies like Huawei and Alibaba have moved to use its products to boost output.
Kingdee Software stock price has soared by 65% this year as demand for cloud computing solutions rose in China. Its annual recurring revenue (ARR) rose to over RMB 3.15 billion, representing a 24.2% annual increase. Kingdee is a tech company that offers solutions like finance, human resource, and supply chain cloud.
The other top Hang Seng Tech companies are the likes of Alibaba Health, Alibaba Group, Xiaomi, JD Health, KingSoft, and Kuaishou Technology, and JD.com.
Just a handful of Hang Senf Tech stocks have crashed this year. The most notable laggards were firms like East Buy Holdings, Trip.com, Hair Smart Home, and Nio.
Hang Seng Tech Index analysis
HSI chart by TradingView
The weekly chart shows that the Hang Seng Tech index has been in a recovery path in the past few months. It has soared from $2,730 in 2022 to near $6,000. The index has moved above the key support at $5,437, the highest swing on October 7. It has invalidated the double-top chart pattern, pointing to more gains.
It has moved above the 23.6% Fibonacci Retracement level and 50-week moving averages. The index has moved above the ascending trendline that connects the lowest swings since 2022.
Therefore, the HSTECH index will likely keep rising as bulls target the 50% retracement level at H$6,870, up by about 22% from the current level. A drop below the support at $5,430 will invalidate the bullish view.
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