In recent developments across the globe, major financial markets faced a notable opening under the weight of increasing tariff pressures, generating an atmosphere of anxiety amongst investorsThe Hang Seng Index opened with a significant downturn, mimicking the volatility observed in other markets such as Japan and South Korea, which both experienced declines of over two percentMost European markets similarly began the day on a low noteHowever, what unfolded was unexpectedly impressive: a robust V-shaped recovery in the Hong Kong marketBy the end of the trading session, the Hang Seng Index finished just slightly down by 0.04%, while the Hang Seng Tech Index and the Hang Seng Enterprises Index both showed minor gains of 0.29% and 0.03% respectively, showcasing a remarkable resilience not witnessed in other regions.

So, what fuels the strength of the Hong Kong stock market amid these tariff concerns? A closer examination reveals that the market had already digested the potential fallout from tariffs in advance

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This anticipation allowed the public and investors alike to manage their expectations effectivelyReports indicate that the current expectation of a ten-percent tariff represents a decrease from earlier, more dire predictions, which has helped alleviate the pressure exerted on the marketAdditionally, data from Goldman Sachs has indicated that short-selling positions have not increased significantly, suggesting a level of confidence among investorsDiscussions during the holiday period revealed a generally optimistic sentiment concerning ongoing negotiations between China and the United StatesThe belief that dialogue will persist encourages investors to decline taking overly bearish positions on Chinese-related assets, recognizing the critical relationship between the two largest economies in the worldThe stability of this relationship is vital for the overall development of the global economy

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A resumption of negotiations could bring vigor and stability not only to the Chinese market but to economies worldwide.

Furthermore, the internet and technology sectors played pivotal roles in the upward trajectory of the Hang Seng Index against the backdrop of adversityNotably, fund flow data highlights a marked influx of capital into ETFs related to internet and tech stock, underscoring investor confidence in the growth potential of these sectorsAs the world shifts towards digital transformation at an alarming pace, the internet and technology industries have emerged as essential growth engines within the economy, showcasing immense market potential and a broad path for continued development.

This trend observed in the Hong Kong market may also provide a benchmark for the A-share market's opening soonWithin specific sectors, AI-related stocks surged impressively, influenced primarily by the developments surrounding DeepSeek, a platform that has reframed foreign investments' outlook on Chinese AI technology

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For instance, Kingsoft Cloud saw its stock jump by 32%, brought on by reports suggesting a newly minted framework agreement with Xiaomi that could be lucrative over the next few yearsAnalysts project that by 2027, Xiaomi-related companies could contribute as much as 40% of Kingsoft Cloud's revenue—an enticing prospect for many investorsThere is also the remarkable surge in demand for AI technologies, with Xiaomi bringing in industry veteran Rofu Li to spearhead its major model developments, ensuring a stream of projects ahead for Kingsoft Cloud.

Moreover, Semiconductor Manufacturing International Corporation (SMIC) recorded a solid 10% increase, contributing significantly to overall market performance—the stock alone boosted the Hang Seng Index by approximately 0.7%. In light of recent developments with DeepSeek, the need for dependency on Nvidia may be lessened, lending a fresh advantage to domestic semiconductor entities

The ongoing restrictions imposed on semiconductor exports to China are expected to tighten further, bolstering the logic behind domestic replacement.

It's worth reiterating that the play in the market now shifts towards AI semiconductors, a domain intricately tied to national prospectsIn times like these, each contribution toward technological advancement can help strengthen China's position on the global stage.

Alibaba also posted a notable 6% increase, a movement that many of its investors may have anticipatedDuring the Spring Festival period, Alibaba introduced its robust model Qwen2.5-Max, which outperformed competitors like LIama and DeepSeek V3 during testing phases, all while rolling out promotional pricingAlongside this innovation, Alibaba Cloud's technological enhancements during the Spring Festival Gala highlighted the extensive application of AI technologies in event execution

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Financially, Alibaba demonstrates promising signs; they project double-digit revenue growth in the second half of the fiscal year 2025. Core business operations show healthy performance, with projections for cloud computing revenue growth returning to double digits while maintaining an EBITDA margin close to 9%. Additionally, Alibaba plans an investment strategy focused on 10 to 20 billion yuan quarterly for infrastructure and R&D development—an operational approach designed to attract foreign capital.

From the Hang Seng Index's performance today, two vital observations can be drawnFirst, the implications of tariffs have long been factored in; as long as China and the US remain engaged in dialogue, the negative impact on the Chinese stock market seems limited, with downward pressure remaining within a manageable realm, where capital is ready to stabilize the situationSecond, analyzing stock movements across Taiwan, Korea, and Japan appears starkly related to Nvidia, revealing significant losses, while sectors benefiting from DeepSeek's positive news are poised to emerge as focal points following the opening of A-shares.