The stock market has been experiencing a notable surge, largely attributed to the excitement generated by the DeepSeeK conceptThis new trend has become the focal point of investment discussions, significantly influencing the performance of the Hong Kong stock exchangeJust recently, the Hang Seng Technology Index climbed by an impressive 7% over three days, while the broader Hang Seng Index saw an increase of over 4%. This momentum has been further fueled by the robust performance of various technology stocks, leading to strong showings in numerous ETFs (Exchange-Traded Funds) that are tied to Hong Kong stocks.

As we delve deeper into the performance metrics, it becomes apparent that the recent wave of optimism within the market is not confined solely to Hong Kong; it has also had varying impacts across global marketsMany ETFs related to Hong Kong have witnessed a remarkable rebound after a brief period of adjustment, marking a significant change in investor sentimentHowever, contrasting dynamics are observable in other markets, including Germany, Saudi Arabia, and France, where related ETFs have displayed weaker performance for several days.

Market analysts suggest that the electric rise in stock prices is heavily influenced by the excitement surrounding DeepSeeKThis new framework offers an aura of hope, revitalizing investor confidence not just in the tech sector but across the Chinese economy, particularly in the burgeoning artificial intelligence (AI) spaceBy leveraging innovative technology at a considerably lower cost for training than many of its predecessors, DeepSeeK has captured the attention of investors, reminiscent of the effect ChatGPT had in the US stock market last yearBoth technologies highlight a seismic shift in how AI is perceived and valued in the market.

On February 10th, the market's enthusiasm was palpable, with the DeepSeeK-related stocks drawing significant attention

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In fact, the Wind Popular Concept Index for DeepSeeK registered an increase of nearly 7%, with its associated sectors like cloud computing, AI computational power, and big data equally performing well, each achieving gains of over 5%. Notably, sectors such as telecommunications and healthcare also saw lively movement, as many stocks within these categories surged during trading hours.

The recent surge in the Hong Kong market is underscored by remarkable gains across three major stock indicesThe Hang Seng Index rose by 1.84%, the Hang Seng Technology Index by 2.65%, and the Hang Seng China Enterprises Index by 2.09%. These figures reflect a robust recovery, with gains exceeding 4% for the Hang Seng Index and over 7% for the technology segment in just three trading daysTechnology stocks notably led the charge, with major players like Alibaba, Meituan, and Baidu witnessing considerable increases in their stock prices.

In addition, various ETFs closely tracking Hong Kong equities—including those focused on education, new economies, and internet ventures—have realized commendable performancesMany of these ETFs recorded gains exceeding 3%, particularly those associated with internet businesses and Chinese concept stocks, which collectively have benefitted from a favorable market environmentIt’s noteworthy that in the last three trading days, over 50 ETFs linked to the Hong Kong market have risen by more than 5%.

However, it is not all positive across the boardWhile the Hong Kong-related ETFs have thrived, ETFs associated with other markets, such as those tracking the S&P consumer sector, German equities, and select Asia-Pacific choices have struggled, some declining by over 3%. The recent drop in the JPMorgan Germany ETF—plummeting more than 19%—highlights the risks associated with previously high-performing cross-border ETFs, which have been adjusting to lower premium rates following recent sell-offs.

The potential behind DeepSeeK suddenly enjoyable in the market is indicative of a greater trend towards the transformation of the AI landscape within China

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Analysts believe that the technology's breakthroughs might serve as a catalyst for the A-share market, steering focus from hardware advancements towards applications and consumer-facing technologiesGiven the current enthusiasm for AI, market observers are keen to identify stocks that could drive significant commercial breakthroughs, particularly in sectors where DeepSeeK excels, such as finance, healthcare, and programming.

Additionally, experts like Chen Yanpeng from Nuoan Fund emphasize that the recent uptick in interest is not just limited to a singular technology or model but is a broader reflection of heightened expectations across the AI landscapeThe dynamism in investments suggests optimism that AI technologies are finally receiving acknowledgment as critical drivers of future economic growthWith this shift in perception, funds are gravitating towards those stocks that showcase genuine commercial viability.

However, one must consider that this surge may predominantly be driven by market sentiments which could prove fleetingAs the landscape solidifies and investors become increasingly discerning about potential AI-driven prospects, there is a strong likelihood that this current phase of growth could sustain for a longer duration than many anticipateYet, the market's emotional highs could easily give way to rational reassessments; hence, the emphasis on investing in those companies demonstrating tangential breakthroughs in the realm of AI is crucial.

Given the nuanced player dynamics in the market, financial strategist Chen Xingwen from Heiqi Capital suggests that part of the disparity in cross-border ETF performance stems from capital reallocating from high-premium ETFs to undervalued assets in Hong KongThis shift has been precipitated by overzealous prices in markets like Germany and Saudi Arabia, prompting regulatory caution and resulting in profit-taking actions as investors seek more stable ventures.

Another key aspect driving this investment shift lies within the policy directives and fundamental expectations influencing investor allocations

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