Morgan Stanley is predicting a significant capital event for Hong Kong’s equity markets this summer, driven not by macroeconomic tailwinds but by a scheduled index change. The bank estimates that the inclusion of two Chinese generic AI companies, Knowledge Atlas Technology, the holding unit of Zipu AI, and Minimax, into the Hang Seng Tech Index on June 8, 2026, will generate passive investment inflows of between $1.25 billion and $1.75 billion.
Passive funds tracking the Hang Seng Tech Index are required to hold stocks in proportion to their index weight. When new names are added, those funds should be bought regardless of valuation sentiment.
With the simultaneous entry of two high-profile AI firms, Morgan Stanley analysts expect the resulting mechanical purchases to be substantial. The bank responded by raising its price target for Minimax to 1,100 HKD from 990 HKD and for Knowledge Atlas Technology from 560 HKD to 990 HKD, a 77% upside for the latter.
Moving beyond the technicalities of the index, Morgan Stanley bases its optimism on the revenues generated by China’s top frontier AI models, predicting revenues of at least one billion dollars by 2026 and more than two billion in 2027.
China’s AI offerings today cost end users about 17% of the rates for similar US models, compared to 5% last year, indicating that the price gap between China and the US in the AI ​​sector is rapidly narrowing.
A major player included in the bank’s recommendation list is Alibaba, which has been named a global AI leader due to its verticalization efforts through in-house chip development (T-Head), cloud computing solutions (AliCloud), and large language models (Qwen).
