The AI Pivot: How New Giants are Reshaping the Hang Seng Tech Index
The Hong Kong technology sector is witnessing a fundamental transformation. While the Hang Seng Tech Index has struggled recently—tumbling more than 11% so far this year—a massive surge of capital is on the horizon. The catalyst? The entry of two powerhouse artificial intelligence firms that are redefining the region’s equity landscape.
According to analysis from Morgan Stanley, the inclusion of Knowledge Atlas Technology and MiniMax into the index is poised to trigger significant passive inflows, estimated between $1.25 billion to $1.75 billion
. This influx arrives at a critical juncture, as only seven of the index’s constituents have seen gains in 2026, including names like Lenovo, JD, Midea, and Hua Hong Semiconductor.
Knowledge Atlas and MiniMax: The New Vanguard
The market’s excitement centers on Knowledge Atlas Technology, the operator of Zhipu AI, and MiniMax. Both companies have seen their stock prices skyrocket since their Hong Kong public debuts in January. They represent a new breed of “frontier” AI companies moving from private development to public market scrutiny.
The two firms bring distinct strengths to the table. Zhipu AI is widely recognized for its advanced coding capabilities, while MiniMax has distinguished itself through a broader multimodal approach, spanning text to audio generation.
This growth is reflected in aggressive price target revisions by Morgan Stanley. Analysts have raised the target for Knowledge Atlas to 990 Hong Kong dollars (approximately $126.37) from 560 HKD, and for MiniMax to 1,100 HKD from 990 HKD.
The Revenue Race: From Niche to Billion-Dollar Scale
The financial trajectory for these AI models is steep. Analysts predict that each of the frontier Chinese AI models could achieve at least $1 billion in revenue this year, with the potential to more than double that figure next year. This suggests a rapid scaling of commercialization that could decouple these stocks from the broader index slump.
However, the “cost advantage” that once defined Chinese AI is narrowing. In the first quarter, the cost of accessing Chinese AI models rose to at least 17% of what U.S. Models charge—a sharp increase from just 5% a year prior.
“We believe AI and [large language model] names will become a much bigger driver of Hong Kong equity markets, reshaping index composition, performance, liquidity, and fund flows,” Morgan Stanley Analysts
Beyond the Newcomers: The Role of Tech Giants
While the newcomers grab the headlines, the established titans are also evolving. Tencent and Alibaba, the index’s largest stocks by market capitalization, have both faced double-digit declines this year. Yet, the narrative is shifting toward how these giants integrate AI across their entire tech stacks.
Alibaba, in particular, remains a top pick for some analysts. The rationale is that the e-commerce giant provides a comprehensive play on AI, spanning from the foundational cloud computing infrastructure to the deployment of AI models.
The Broader IPO Pipeline and Regulatory Winds
The trend toward AI-centric markets is supported by strong regulatory tailwinds. Technology companies have already accounted for 40% of Hong Kong IPO fundraising year-to-date, and they make up 43% of the current pipeline.
While Knowledge Atlas and MiniMax are the first major model-focused companies to move public, the sector still holds significant untapped potential. Competitors such as StepFun and Moonshot—the operator of the Kimi AI model—remain privately held, leaving the door open for future market-shifting IPOs.
“Strong regulatory support is evident… Reinforcing AI as a durable force in Hong Kong’s equity market,” Morgan Stanley Analysts
For more insights on Asian markets, explore our Market Analysis hub or check out the latest HKEX official filings for real-time data.
Frequently Asked Questions
What are passive inflows in the context of the Hang Seng Tech Index?
Passive inflows occur when index-tracking funds (like ETFs) are required to buy shares of a company because it has been added to the index they track.
How do Zhipu AI and MiniMax differ?
Zhipu AI (Knowledge Atlas) is primarily noted for its coding capabilities, whereas MiniMax is recognized for its breadth of multimodal AI, including audio and text generation.
Why is the cost of Chinese AI models increasing?
As adoption grows and models become more sophisticated, the pricing is shifting closer to global standards, rising from 5% to at least 17% of U.S. Model costs in a single year.
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