Most Asian stocks rallied on Tuesday fueled by renewed optimism surrounding Chinese stimulus plans and growing confidence in the region’s AI capabilities. The Hong Kong markets led these gains, driven by robust buying in major tech stocks, while Japanese equities also excelled following significant movements among the country’s largest trading companies.

Key Highlights of the Day

Hong Kong Shines with AI and Stimulus Optimism

• Hong Kong’s Hang Seng Index soared nearly 2% to reach three-year highs as investors flocked to major tech stocks.
• Baidu Inc (HK:9888) surged 10% after revealing two new AI models, one reportedly capable of rivaling industry leader DeepSeek.
• Alibaba Group (HK:9988) climbed over 4% after CEO Eddie Wu stressed the significance of AI for its growth targets in 2025.
• These technological advancements have positively influenced broader market sentiment, showcasing confidence in China’s ability to lead in digital and AI innovations.

Stimulus Optimism in Chinese Markets
Broader indices in China, such as the Shanghai Shenzhen CSI 300 and Shanghai Composite, recorded modest gains of 0.3% and 0.2%, respectively, following detailed announcements regarding stimulus plans from Beijing. Investors are hopeful these measures will promote economic recovery in 2025, boosting consumer spending and corporate performance.

Japanese Markets Bolstered by Trading House Success
Japan’s Nikkei 225 rose 1.6%, with the TOPIX index increasing by 1.5%, primarily supported by the performance of five major trading houses—Itochu Corp. (TYO:8001), Mitsui & Co., Ltd. (TYO:8031), Mitsubishi Corp. (TYO:8058), Sumitomo Corp. (TYO:8053), and Marubeni Corp. (TYO:8002). The surge was also aided by billionaire investor Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRKa), which increased its stakes in these companies to nearly 10%, demonstrating institutional confidence.

Mixed U.S. Influence and Trade Concerns
Despite Wall Street’s overnight strength, U.S. futures fell in Asian trading as investors remained cautious regarding potential trade tariffs and recession risks. Heightened geopolitical tensions in the Middle East, particularly following military actions by Israel against Hamas, also contributed to a more subdued risk appetite in the region.

Conclusion

Tuesday’s performance in Asian markets was a blend of optimism sparked by China’s stimulating measures and advancements in AI, juxtaposed with cautious sentiment due to U.S. trade tensions. Hong Kong led the rally while Japan benefitted from strategic institutional investments in major trading firms. As stakeholders monitor upcoming signals from central banks and global trade dynamics, the regional outlook remains dynamic, closely connected to domestic policies and international trends.