Hong Kong Stocks Log Best Year Since 2017 as AI Boom Fuels Tech Rally

BEIJING (dpa-AFX) - MiniMax, a Chinese AI startup, said on Tuesday that it is reportedly looking to bring in Alibaba Group Holding (BABA) and the Abu Dhabi Investment Authority as cornerstone investors for its upcoming IPO in Hong Kong.

They aim to raise over $600 million and could start taking orders from investors as soon as Wednesday, gearing up for a listing in January.

Other expected backers include IDG Capital, Perseverance Asset Management, and South Korea's Mirae Asset.

MiniMax has managed to stay afloat amid the fierce generative AI price war in China, raking in $30.5 million in revenue last year as it works to become the first generative AI startup to go public in the country.

BABA is currently trading at $148.90, up $0.42 or 0.28 percent on the New York Stock Exchange.

Copyright(c) 2025 RTTNews.com. All Rights Reserved

Copyright RTT News/dpa-AFX

By Jack Denton

Alibaba and other Chinese names fell in Monday trading, trailing U.S. stocks even as the wider market exhibited a lackluster performance to start the final week of the year.

Investors may be considering economic weakness in China — and the extent to which the Chinese government will do something about it.

Alibaba's American Depositary Receipts — or ADRs, essentially its U.S.-listed stock — fell 3.2%, with JD.com down 1.4% and Temu parent PDD also 1.3% lower. The S&P 500 was off 0.5% by comparison.

Monday was a poor start to the week for the market in Hong Kong, where Alibaba and many Chinese tech peers are listed, with the Hang Seng Index dropping 0.7%.

One factor pushing down Hong Kong stocks — and likely Alibaba, in particular — was continued worries about of China's economy.

Chinese industrial companies experienced a profit decline of 13.1% in November, accelerating from a 5.5% fall in the prior month, according to economic data revealed over the weekend.

On Sunday, China's Ministry of Finance announced that the government would increase spending to boost consumer demand — a promise of fiscal stimulus to come.

Alibaba, with a business primarily still in online retail despite its move into artificial intelligence (AI), is highly sensitive to fluctuations in China's economy, and especially consumer sentiment.

Declines in Alibaba stock on Monday may indicate that investors do not see Chinese fiscal stimulus plans as being sufficient enough to offset the slowdown in the world's second-largest economy.

More broadly, Alibaba's ADRs have had a great year, gaining 75% to the highest levels since 2021 amid a surge on the back of AI optimism.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Jack Denton

Given the S&P 500's strong year, investors may be forgiven for not looking beyond the U.S. — but they should. While the S&P 500 rose some 18% so far this year, London's FTSE 100 is up nearly 21%, on track for its best year since 2009. "The outperformance is striking, especially given the U.K.'s limited exposure to technology stocks," wrote Frédérique Carrier and colleagues at RBC Wealth Management.

While artificial intelligence has fueled U.S. stocks, those trends are largely absent in the FTSE, which is stacked with financials, healthcare, energy, and defense. "The U.K. equity market has been carried by higher corporate profits and generous cash returns to shareholders, with a smattering of merger-and-acquisition activity on top," wrote Russ Mould, brokerage AJ Bell's investment director.

This bull market may well continue. "Valuations still look attractive to us despite the rally," noted RBC. AJ Bell's end-of-2026 FTSE price target is 10,750, up from 9,850 this past Tuesday, an estimated 9% gain. Bell points to average profit growth estimates of 14% from FTSE companies — in line with Wall Street expectations for S&P 500 earnings.

Yes, Goldman Sachs estimates an 11% gain for the 2026 S&P 500 and Morgan Stanley sees a 14% gain, which beats AJ Bell's 9% for the FTSE. But there are still reasons to buy. "The FTSE 100's profit and dividend mix by sector and by stock means it is a good play on both global growth and inflation," Mould wrote.

Write to Jack Denton at jack.denton@barrons.com

Last Week

Markets

Over the pre-Christmas weekend, the U.S. seized one oil tanker leaving Venezuela and pursued another. Oil rose. Gold, silver, and copper set highs. The third quarter saw 4.3% growth, but consumer confidence fell again. Stocks began a Santa Claus rally powered by tech; the S&P 500 hit a high. On the short week, the Dow industrials rose 1.2%; the S&P 500, 1.4%; and the Nasdaq Composite, 1.2%.

Companies

The Delaware Supreme Court reinstated Elon Musk's Tesla pay package that the state's Chancery courts had blocked for lack of transparency. Waymo cabs in San Francisco stopped, blocking traffic, after a power outage knocked out traffic lights. Uber Technologies and Lyft are joining with Baidu to introduce robo-taxis to the U.K. Novo Nordisk won U.S. approval for its Wegovy weight-loss pill. The U.S. suspended five offshore wind-power projects, saying they posed a security threat to radar. President Trump called for defense companies to stress production, not share buybacks and executive comp.

Deals

Paramount Skydance said Oracle's Larry Ellison would guarantee $40.4 billion of its bid for Warner Bros. Discovery...A consortium led by Permira and Warburg Pincus is taking software company Clearwater Analytics private for $8.4 billion...Nelson Peltz's Trian Fund and venture firm General Catalyst will buy asset manager Janus Henderson in an all-cash $7.4 billion deal... Alphabet agreed to buy Intersect Power for $4.75 billion, including debt.

Next Week

Monday 12/29

An otherwise quiet week on Wall Street will feature a couple of key real estate data points. On Monday, the National Association of Realtors releases its pending home sales index. Contract signings are projected to have increased by 0.8% in November. On Tuesday, the S&P Dow Jones Indices' Cotality Case-Shiller index is expected to show that home prices rose at a 1.1% annual rate in October.

Tuesday 12/30

Minutes from the Federal Open Market Committee's last policy meeting of 2025 will be released. Officials opted to cut the federal-fund rate by a quarter of a percentage point at the December meeting; however, three committee members dissented. The group also published its projections for interest rates, showing further disagreement. While the median projection was for one cut in 2026, several members penciled in two cuts, and four members forecast none.

Wednesday 12/31

The final trading session of the year will wrap up on Wednesday at its usual time of 4 p.m. With the S&P 500 headed for a double-digit gain in 2025 and similar gains expected for 2026, Wall Street has a reason to pop the Champagne. Plus, U.S. stock and bond markets are closed on Thursday in observance of New Year's Day.

The Numbers

$1.7 T

Issuance of investment-grade corporate bonds this year, nearing the record of $1.8 trillion in 2020.

$136 B

The amount of consumer debt bought by private-credit companies in 2025, 14 times more than 2024.

50%

How much China increased its research-and-development spending from 2020 to 2024.

55

Number of congressional lawmakers not running for re-election next year, beating 2018's high of 54.

Write to Robert Teitelman at bob.teitelman@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Jack Denton

This was a great year for Chinese stocks, and especially technology names such as Alibaba. Investors can expect the bull run to continue, according to Goldman Sachs, albeit with some caveats.

Alibaba's American depositary receipts — or ADRs, the company's closest thing to U.S.-listed stock — have gained more than 75% this year, blowing the S&P 500 out of the water. Other Chinese tech names, such as NetEase and Baidu, have also performed well, with those stocks up more than 50% each.

China's tech sector has had a remarkable turnaround after years of regulatory pressures and economic headwinds. Alibaba ADRs remain priced around $150 — up 0.5% in Monday's premarket — which is just half of the late-2020 high, but a price level that may have been inconceivable in 2022, for instance, when it traded near $60.

Helping Alibaba and others rally has been the narrative around artificial intelligence (AI), with trends that made Nvidia the first $5 trillion company also helping Chinese players in this booming tech space.

"AI has changed the game for Chinese tech equities," a team led by Kinger Lau at Goldman Sachs wrote in a note on Monday. They detailed lessons learned from China in 2025 and some predictions for 2026 — including more gains ahead, though with a change in tone.

"Two consecutive years of positive returns: a slow(er) bull market is probably in," they wrote. "We expect the bull run to continue, but at a slower pace. We forecast Chinese stocks to rise 38% by end-27... This is reminiscent of an equity cycle transition from Hope to Growth."

Other lessons learned from China in the last year, according to Goldman Sachs, are that better trade outcomes — including less of an impact from U.S. tariffs than expected — have offset domestic fiscal policy misses. Despite headwinds from trade, they added, "China's journey to the world" continues.

Consumers are still spending, Lau and the team at Goldman also noted, though in different pockets of China's economy — and inflation remains a key trend ahead, with new hopes for policy to ignite healthy price growth.

Lau and co also added that the latest five-year plan from the Chinese government "may have redefined investors'...plan for Chinese equities," after technology was set among top priorities for the years to 2030.

Despite lingering risks, "China is investible," the team at Goldman wrote, and "diversification value is on full display." On tech and AI — which has a bearing on Alibaba as one of China's key players in the space — Lau's team is also positive.

"The breakthroughs in AI have rewritten the narrative for tech equities, " they wrote. "Valuations have re-rated in the Chinese AI tech ecosystem, but they look inexpensive vis-à-vis the U.S., considering China's potential upside in capex spend and its focus on AI monetization via use-case creation."

The technology arms race between the U.S. and China, they added, "will likely create structural winners" in China — particularly in certain niches. Those are where China's cost advantages are high, such as in power and human capital, and where government support is strong, such as in semiconductor design and manufacturing.

After years of stagnation for Chinese stocks such as Alibaba, it gives investors something to look forward to in 2026.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

China Vanke, once the country's largest home developer, is no longer too big to fail.

As the state-backed property giant buckles under the weight of its debt, the government has so far refrained from stepping in. Analysts say that sends a clear message: Beijing isn't coming to the sector's rescue.

Vanke, which has about $170.43 billion in assets, is set to become the latest domino to fall after the Shenzhen government abruptly reversed its position on a partial bailout of the developer. Many of China's other large developers have already defaulted, and a Vanke collapse would raise questions about how policymakers plan to address the real-estate slump as it drags on into a sixth year in 2026.

Given the heavy weighting on household balance sheets, letting the crisis continue unabated will keep consumer sentiment weak and weigh on consumption.

Analysts at Morgan Stanley see little chance of any more bailouts, in part because the government doesn't want to be seen as rewarding developers that took on too much debt.

Signs from the top reinforce that view.

When China's leadership gathered earlier this month to set policy priorities for 2026, the property sector was pushed down the agenda. The readout from the meeting also removed language in last year's communique calling for efforts to "stop the decline and return to stability" in the real-estate sector.

Dominic Soon, head of APAC credit research at Debtwire, doesn't expect to see any property stimulus boost next year.

"We have seen the government announce a variety of measures but with limited effect," he said.

Given the significant amount of money needed to rescue the property sector--which at its peak accounted for roughly 25% of gross domestic product--Morgan Stanley analysts expect fiscal-backed support to remain restrained, with officials sticking to a piecemeal approach.

Beijing is still encouraging regional authorities to bring down the glut of unsold real-estates projects by turning them into affordable housing, but analysts at Gavekal Dragonomics say the slow progress seen so far shows that the incentives aren't strong enough.

"There seems little chance of substantial interventions to contain the continued decline in property sales and prices," they wrote in a note.

Instead, Beijing appears to be betting that exports will continue to support growth, while a booming stock market and other policy measures, like consumer subsidies, can lift sentiment. But analysts say policymakers risk underestimating the persistent weakness in the property sector if they want to boost domestic demand to offset the threat of external shocks.

"Given the widespread ownership of property and the spillovers to upstream and downstream sectors, we think the sustained tumble of the property market will continue to reinforce the negative feedback loops between property and the macroeconomy, labor market and deflation expectations," economists at Barclays said.

Debtwire's Soon said policymakers also need to consider the longer term, secondary effects of a "new lower-level normal" for the property sector, and how that will impact construction starts, the workforce involved and domestic consumption.

"If you were a homebuyer, you'd hold off on buying a new house until you knew that home prices have at least stabilized and the developer doesn't default, leaving you with an unfinished home," he said.

He noted that authorities recently asked two housing-data providers to stop publishing monthly sales figures, which doesn't inspire much hope that conditions are improving.

Still, economists say that unless China's overall growth slumps, policymakers are likely to continue drip-feeding support to the sector, mitigating risks instead of bolstering growth.

Economists at Pantheon Macroeconomics think 2026 will see more of the same type of targeted policy measures. That could include mortgage rate subsidies, though similar moves trotted out in cities like Wuhan and Changchun indicate that this would lead to only a limited sales boost at best, they said.

Without consistent government support, a real-estate turnaround will remain out of reach.

Previous rounds of easing show that while any fresh stimulus may lift fragile sentiment in the short term, stabilizing the housing market will require consistent, concerted policies, Morgan Stanley analysts said.

Write to Singapore Editors at singaporeeditors@dowjones.com

China Vanke, once the country's largest home developer, is no longer too big to fail.

As the state-backed property giant buckles under the weight of its debt, the government has so far refrained from stepping in. Analysts say that sends a clear message: Beijing isn't coming to the sector's rescue.

Vanke, which has about $170.43 billion in assets, is set to become the latest domino to fall after the Shenzhen government abruptly reversed its position on a partial bailout of the developer. Many of China's other large developers have already defaulted, and a Vanke collapse would raise questions about how policymakers plan to address the real-estate slump as it drags on into a sixth year in 2026.

Given the heavy weighting on household balance sheets, letting the crisis continue unabated will keep consumer sentiment weak and weigh on consumption.

Analysts at Morgan Stanley see little chance of any more bailouts, in part because the government doesn't want to be seen as rewarding developers that took on too much debt.

Signs from the top reinforce that view.

When China's leadership gathered earlier this month to set policy priorities for 2026, the property sector was pushed down the agenda. The readout from the meeting also removed language in last year's communique calling for efforts to "stop the decline and return to stability" in the real-estate sector.

Dominic Soon, head of APAC credit research at Debtwire, doesn't expect to see any property stimulus boost next year.

"We have seen the government announce a variety of measures but with limited effect," he said.

Given the significant amount of money needed to rescue the property sector--which at its peak accounted for roughly 25% of gross domestic product--Morgan Stanley analysts expect fiscal-backed support to remain restrained, with officials sticking to a piecemeal approach.

Beijing is still encouraging regional authorities to bring down the glut of unsold real-estates projects by turning them into affordable housing, but analysts at Gavekal Dragonomics say the slow progress seen so far shows that the incentives aren't strong enough.

"There seems little chance of substantial interventions to contain the continued decline in property sales and prices," they wrote in a note.

Instead, Beijing appears to be betting that exports will continue to support growth, while a booming stock market and other policy measures, like consumer subsidies, can lift sentiment. But analysts say policymakers risk underestimating the persistent weakness in the property sector if they want to boost domestic demand to offset the threat of external shocks.

"Given the widespread ownership of property and the spillovers to upstream and downstream sectors, we think the sustained tumble of the property market will continue to reinforce the negative feedback loops between property and the macroeconomy, labor market and deflation expectations," economists at Barclays said.

Debtwire's Soon said policymakers also need to consider the longer term, secondary effects of a "new lower-level normal" for the property sector, and how that will impact construction starts, the workforce involved and domestic consumption.

"If you were a homebuyer, you'd hold off on buying a new house until you knew that home prices have at least stabilized and the developer doesn't default, leaving you with an unfinished home," he said.

He noted that authorities recently asked two housing-data providers to stop publishing monthly sales figures, which doesn't inspire much hope that conditions are improving.

Still, economists say that unless China's overall growth slumps, policymakers are likely to continue drip-feeding support to the sector, mitigating risks instead of bolstering growth.

Economists at Pantheon Macroeconomics think 2026 will see more of the same type of targeted policy measures. That could include mortgage rate subsidies, though similar moves trotted out in cities like Wuhan and Changchun indicate that this would lead to only a limited sales boost at best, they said.

Without consistent government support, a real-estate turnaround will remain out of reach.

Previous rounds of easing show that while any fresh stimulus may lift fragile sentiment in the short term, stabilizing the housing market will require consistent, concerted policies, Morgan Stanley analysts said.

Write to Singapore Editors at singaporeeditors@dowjones.com