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| HSI1 | 24,448.95 | -32.91 | 173.71B |
| HSCEI1 | 8,260.15 | -13.95 | 54.80B |
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2026-11-09 15:13:37 UOB Kay Hian issued a research report saying that the artificial intelligence industry is shifting from a capacity-driven investment cycle to an intelligent monetization cycle, where model differentiation, inference efficiency, enterprise adoption and sustainable gross profit generation will increasingly determine value. The broker maintained a constructive view on China's AI value chain, preferring BABA-W (09988.HK) and Z.AI (02513.HK), while TENCENT (00700.HK) is viewed as a long-term beneficiary of AI application monetization. It maintained an "Equalweight" rating on the sector, with BABA-W (09988.HK), TENCENT (00700.HK) and Z.AI (02513.HK) as top picks, all rated "Buy". The broker noted that since mid-2026, the capability gap between leading Chinese and US models in complex reasoning, programming and long-horizon agent tasks has widened, but Chinese models are expected to narrow the gap by mid-2027. Leading Chinese model developers are shifting focus from benchmark performance to real-world adoption and commercial scalability. Programming, partnerships with cloud service providers and vertical AI agents will become the key drivers of the next phase of monetization. Anti-distillation measures may accelerate industry consolidation, while Chinese laboratories are developing tools and synthetic data pipelines to sustain progress. Rising barriers in capital, data and engineering will increasingly favor top-tier laboratories with proprietary feedback loops, advanced post-training capabilities and efficient inference infrastructure. On geopolitics and interest rates, the broker believes that if the US Congress comes under Democratic Party control, it may help accelerate the resolution of the US-Iran conflict, ease oil prices and inflation, and pave the way for Federal Reserve easing and improved liquidity for Chinese ADRs, potentially benefiting valuations of Chinese internet stocks. Liquidity-driven valuation expansion is expected to be the most immediate catalyst, particularly benefiting BABA-W (09988.HK) and TENCENT (00700.HK). For individual stocks, the broker maintained a "Buy" rating on Alibaba with a TP of HKD189; maintained a "Buy" rating on Tencent Holdings with a TP of HKD537; maintained a "Buy" rating on Z.AI (02513.HK) but lowered the TP to HKD989; and maintained a "Buy" rating on MINIMAX-W (00100.HK) but lowered the TP to HKD284. The TP cuts for the latter two reflected broad valuation compression among AI model stocks. (da/u)~ AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |