Why The Hang Seng Is Under Pressure While The AI Sector Trades Independently? Three Core Hong Kong AI Assets To Watch
Since the start of the year, Hong Kong equities have exhibited defensive and volatile behavior amid recurring geopolitical tensions in the Middle East and uncertainty over overseas policy expectations. The Hang Seng Index declined 3.29% in the first quarter, while the Hang Seng Tech Index retreated 15.70%. Despite the broader market weakness, a cohort of AI‑themed stocks has produced an independent rally, creating a marked divergence from the general market trend. The leading performers this year concentrate on three core AI themes: large language models, optical communications and memory.
Investor flows into large model developers and hardware suppliers reflect a preference for earnings visibility and industry scarcity in a cautious market environment. Domestic large model names Zhizhipu（02513.HK）and MINIMAX‑W（00100.HK）have been the most prominent beneficiaries, recording year‑to‑date gains of approximately 715% and 476% respectively, driven by demand for intelligent agent applications.
The optical communications segment has also outperformed as global compute infrastructure accelerates. Changfei Optical Fiber Cable（06869.HK）has risen more than 318% year‑to‑date, supported by surging demand for low‑latency, high‑bandwidth interconnects within AI clusters. Fiber consumption inside AI deployments is estimated at five to ten times that of traditional data centers, and global fiber demand grew 75.9% year‑on‑year in 2025. CRU projects that AI‑related fiber demand will expand from under 5% in 2024 to over 30% by 2027. Under the combined pressure of explosive demand and constrained capacity, core fiber products have experienced a sustained price upcycle; for example, mainstream G.652.D single‑mode fiber rose from about RMB 20 per core‑kilometer at the start of the year to above RMB 80 by March, an annual increase exceeding 410%. As the only global leader with vertically integrated control across preform, fiber and cable production, Changfei’s self‑sufficiency in optical preforms above 90% positions it to capture significant margin expansion during this pricing cycle.
Memory has reentered a “super cycle” as AI workloads shift toward inference and memory bandwidth becomes a critical performance constraint for AI servers. Two domestic integrated circuit design leaders, Montage Technology（06809.HK）and GigaDevice（03986.HK）, have appreciated strongly, rising roughly 96% and 163% respectively. Montage, a global leader in memory interface chips, has seen rapid shipment growth of its second‑generation MRCD/MDB products in 2026, delivering a 45% improvement in data transfer rates. Coupled with memory price gains, investors increasingly regard Montage as a strategic supplier to AI servers rather than a commodity component vendor. GigaDevice has absorbed spillover demand and pricing power as overseas giants allocate a substantial portion of capacity to HBM4, creating shortages in niche DRAM and SLC NAND segments; its NOR Flash product line has similarly benefited from constrained capacity at major international suppliers.
Beyond model developers, compute infrastructure and core hardware, the Hong Kong market is delineating a coherent AI investment ecosystem from foundational compute to intelligent hardware. While the AI thematic has demonstrated remarkable upside, investors should remain vigilant about valuation excess and crowded positioning in certain high‑momentum names. The recent parabolic moves in Zhizhipu and MINIMAX suggest the theme may have reached a cyclical peak in market attention. For investors seeking additional opportunities, selectively rotating from the overheated model layer into reasonably valued segments of the AI hardware chain may offer a more balanced exposure to the sector’s long‑term structural growth.
