Morgan Stanley says the addition of two Chinese artificial intelligence companies is expected to add more than $1 billion to the underperforming Hang Seng Tech index. Despite the excitement surrounding China’s AI, Hong Kong’s technology stock index is down more than 11% since the beginning of the year. In 2026, only seven index constituents rose in value, led by Huahong Semiconductor, Lenovo, Jingdong, Midea, and several electric vehicle stocks. Meanwhile, generative AI model companies Knowledge Atlas Technology, which operates Zhipu AI, and MiniMax have both soared since going public in Hong Kong in January. Morgan Stanley analysts said in a note on April 27 that both stocks will join the Hang Seng Tech Index on June 8, and are expected to receive passive inflows of $1.25 billion to $1.75 billion. Analysts raised their price targets for each stock, with Knowledge Atlas raising it to HK$990 ($126.37) from HK$560 and MiniMax from HK$990 to HK$1,100. While Zhipu’s models are known for their coding capabilities, MiniMax stands out with its wide range of AI capabilities, from text to audio generation. MiniMax, like many Chinese AI models, is relatively cheaper to use than its U.S. peers, making it a popular choice for OpenClaw AI agent users. But things are changing as more people use China’s AI tools. Morgan Stanley analysts noted that the cost of accessing Chinese AI models rose to at least 17% of U.S. AI model billings in the first quarter, up from just 5% a year earlier. Analysts predict that each of China’s frontier AI models could achieve at least $1 billion in revenue this year and more than double that next year. Knowledge Atlas and MiniMax are the first public listings of two major Chinese companies focused on AI models. Competitors such as Moonshot and Stepfun, which operate Kimi AI Model, remain privately held companies. “We believe in AI; [large language model] Analysts at Morgan Stanley said: “Hong Kong stock market stocks will reshape index composition, performance, liquidity and capital flows, becoming an even bigger driver for the Hong Kong stock market. With tech accounting for 40% of Hong Kong’s IPO funding year-to-date and 43% of the pipeline, strong regulatory support is evident, reinforcing AI as an enduring force in the Hong Kong stock market.” Although the Hang Seng Tech Index’s market capitalization has fallen by double digits so far this year, Morgan Stanley analysts named it the top Chinese internet stock based on their view that the e-commerce giant leverages AI across its entire technology stack, from cloud computing to AI models.CNBC’s Michael Bloom contributed to this report.
