Chinese AI Stocks Set to Attract $1.75B Despite Market Volatility

Hong Kong's technology sector braces for a significant capital influx as two artificial intelligence firms prepare to join the Hang Seng Tech Index. Morgan Stanley projects $1.25 billion to $1.75 billion will flow into the benchmark, despite its 11% decline since January.

Knowledge Atlas Technology (Zhipu AI) and MiniMax, both trading since January, have seen their target prices surge. Morgan Stanley raised Zhipu's target to HK$990 from HK$560, while MiniMax climbed to HK$1,100 from HK$990. These companies represent China's first major public AI model specialists.

The growth comes amid China's contrasting approach to AI development—restricting certain Silicon Valley-style innovations while protecting domestic jobs. Zhipu excels in coding-focused models, while MiniMax offers diverse capabilities from text generation to audio creation. Chinese AI models maintain a cost advantage over US counterparts, though the gap is narrowing.