In a remarkable display of independence, Hong Kong's stock market showcased a robust performance amidst significant declines in global markets. The Hang Seng Index faced a shaky start, grappling with considerable losses in the morning session. However, the market revved up its engines around 11 AM, marking a notable shift towards recovery. By the closing bell, the Hang Seng Technology Index and the Hang Seng China Enterprises Index had both managed to close in positive territory, while the more comprehensive Hang Seng Index saw a slight dip of merely 0.04%. A closer examination of the indices reveals that the primary drivers behind this resilience stem from sectors such as big data, cloud computing, semiconductors, cloud offices, and artificial intelligence.

Analysts attribute this surprising strength of the Hong Kong stock market to three major catalysts. Firstly, the surge in popularity of the DeepSeek AI chatbot, which, since its launch, has witnessed a staggering rate of adoption globally. In just 18 days, the app crossed over 16 million downloads, crowning itself atop the download charts of the Apple App Store across 140 countries. Notably, it also clinched the number one spot in the Android Play Store in the United States, highlighting a fervent interest in AI-driven solutions.

Secondly, solid data from the recent Lunar New Year period positively impacted market sentiment. On February 2, Hong Kong's Immigration Department registered nearly 1.14 million total crossings that day. Meanwhile, Macau reported an increase in tourist numbers, with about 189,100 visitors on the fifth day of the Lunar New Year, reflecting a 6.9% jump compared to the previous year. Additionally, New World Development Company (NWD) noted a surge of approximately 10% in foot traffic and sales during the Lunar New Year holidays this year, compared to the same period last year, which is a promising indicator of consumer confidence.

Furthermore, external news reports hinting at a possible thaw in trade disputes have served to bolster market optimism, contributing to the warmth enveloping the market.

In the afternoon session, the Hang Seng Technology Index rebounded after a dip of over 3%, aligning with a synchronous strengthening of the Hang Seng and directly related indexes. At market close, while the Hang Seng Index remained marginally down by 0.04%, the Hang Seng Technology Index rallied to finish 0.29% higher. This shift underscores the significance of technology stocks as essential supports for the market's upward trajectory. Prominent AI-related stocks made headlines, with Alibaba surging over 6%, Semiconductor Manufacturing International Corporation (SMIC) climbing by more than 10%, and Kingsoft Cloud soaring over 31%, marking all-time high stock prices.

The sustained excitement surrounding DeepSeek is largely attributed to the app's success. According to market analytics from Appfigures, excluding data from Chinese third-party app stores, DeepSeek's application officially vaulted to the top of the Apple App Store on January 26 and has maintained its leading position ever since. Interestingly, India emerged as the largest source of new users for DeepSeek, accounting for 15.6% of the total downloads across all platforms. This reflects the growing demand for intelligent tools in emerging markets, as well as the trend of 'AI applications sinking down' — where the proliferation of technology drives market expansion. This resulted in a robust performance in the tech sector with notable surges, particularly in SMIC, which experienced gains exceeding 10%.

The positive data from the Lunar New Year celebrations played a critical role too. NWD indicated that foot traffic and sales during the holiday period from January 29 to February 2 this year saw a marked increase of around 10%. The company had strategically deployed early measures, distributing over 10,000 coupons through popular review platforms in early January to engage mainland customers.

Furthermore, as the Lunar New Year coincides with Valentine's Day this year, demand for premium jewelry and gold accessories is projected to increase by nearly 10%, as consumers indulge in festive shopping. Certain dining establishments have also been exceptionally busy around this period. Newly launched restaurants reported thriving patronage, often resulting in long queues during the holiday.

On February 3, the Hong Kong Stock Exchange celebrated its New Year opening ceremony. During this event, Financial Secretary Paul Chan noted that the Hang Seng Index had cumulatively risen by almost 4,500 points in the Year of the Dragon, evidencing a growth of over 28%. Chan emphasized that market liquidity has improved considerably over the past year, leading to an average daily turnover approaching HK$132 billion in 2024, which reflects an increase of over 26% year-on-year. Specific sectors like exchange-traded funds (ETFs), as well as futures and options, have shown heightened trading volumes.

Chan shared three optimistic phrases envisioning the Hong Kong stock market traverse through the Snake Year: “Cunning as a serpent, riding the wave,” “Quick as a flash, smooth sailing ahead,” and “Golden serpent dances, bringing wealth.”

Meanwhile, the CEO of Hong Kong Exchanges and Clearing, Nicolas Aguzin, proclaimed that the exchange and the stock market enjoyed a fruitful year, breaking numerous records in stock trading volume despite a backdrop of external uncertainties. Aguzin believes that the Hong Kong market demonstrates resilience and is optimistic about the influx of new stock listings, heralding new opportunities that await.

The 25th anniversary of the exchange marks a significant milestone as it enters a new phase of development with successful optimization in connectivity. Aguzin emphasized the recent strong turnover and listing performance, indicating ongoing efforts to enhance international competitiveness and influence in attracting corporate listings.

As market watchers ponder the potential opportunities within the Hong Kong stock market, some wonder where the next big wave might surge from. Analysts at Huatai Securities opine that after the Lunar New Year, the market is likely to maintain a fluctuant pattern influenced by trade tensions which disrupt risk appetites, as well as a lack of definitive signs of easing in global liquidity.

They recommend investors adapt strategies in accordance with shifts in profit forecasts: increasing allocations in internet and tech hardware sectors to seize on tech stock value reassessments; diversifying investments to include consumer goods benefiting from post-holiday consumption rebounds; and maintaining foundational positions in dividend-bearing securities with stable earnings expectations.

In further analysis, the allure of the Hong Kong market in 2025 may prominently depend on three factors: overseas liquidity, geopolitical dynamics especially post the new U.S. presidential administration, and optimistic forecasts for the Chinese economy. The potential for valuation increases appears promising even as 2025 draws closer.

Additionally, an outlook from CMB International points to the continued potential for business profit recovery and further expansion of domestic demand policies. There is an evident bias toward policies that improve the livelihoods of the populace, as well as enhancements within the real estate and consumer sectors. A likely rate cut by the Federal Reserve in the first half of the year could provide further leeway for liquidity expansion.