Following a surge in global AI equities caused by China’s DeepSeek, Hong Kong shares increase.
Hong Kong’s benchmark Hang Seng index ended the session on January 28 on a positive note, despite most other Asia-Pacific markets remaining closed for the Lunar New Year holiday. Trading in the Hang Seng was also limited to half a day ahead of the holiday.
In the brief session, the Hang Seng index rose 0.14 percent, closing at 20,225.11. This uptrend stood in stark contrast to the global rout in AI-driven stocks, which were hit hard by concerns over China’s disruptive low-cost AI startup, DeepSeek, challenging the dominance of the US AI industry.
While AI-related stocks plunged on Wall Street, chipmaker stocks in Japan also suffered a similar fate. Japan’s chip-related stocks extended losses for a second day, with major players like Advantest, Tokyo Electron, and Renesas Electronics dropping between 4-11 percent. As a result, Japan’s Nikkei 225 index fell 1.4 percent on January 28. Meanwhile, markets in Taiwan, South Korea, and China were closed for the holiday.
In the West, Wall Street indices took a significant hit, with the tech-heavy Nasdaq dropping 3 percent, driven by a sell-off in AI-related stocks. Nvidia shares tumbled 17 percent overnight, causing a $600 billion loss in market capitalization, marking the largest single-day drop for any company in US history. Other semiconductor companies, such as Broadcom, and data center firms reliant on Nvidia’s GPUs, including Dell, Hewlett Packard Enterprise, and Super Micro Computer, also recorded deep cuts.
The surge in popularity of DeepSeek, China’s low-cost AI alternative, has sparked fears of the popping of AI stock bubble, with its competitive AI model being produced at a fraction of the cost of Silicon Valley counterparts.
DeepSeek’s impressive performance has propelled its rise, overtaking OpenAI’s ChatGPT in downloads on the Apple App Store in the US just a week after its launch, as reported by The Spectator Index. This has led to DeepSeek dethroning ChatGPT as the most popular AI app both in China and the US.
DeepSeek’s AI models were developed for less than $6 million, a stark contrast to the billions spent by Silicon Valley firms, drawing the attention on US tech giants like Nvidia and Microsoft that have heavily invested in the AI space. The startup’s efficient use of Nvidia’s GPUs has raised concerns about a shift in the AI ecosystem, threatening the dominance of established US tech giants in the sector.
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