China’s blue-chip CSI300 Index edged down 0.1% by the lunch break, while the Shanghai Composite Index was flat.

Hong Kong benchmark Hang Seng was up 1.4%.

Alibaba’s Hong Kong shares surged 6.7%, hitting a four-month peak today, after the Information reported Apple is partnering with the Chinese tech giant to roll out AI features for iPhone users in China.

Baidu shares fell 3.5%. “Apple had selected Baidu as its main partner last year, but the Chinese company’s progress in developing models for Apple Intelligence fell short of its standards,” the report said.

Tech majors traded in Hong Kong rose 1.2%, with Lenovo Group and BYD Electronic up 4.6% and 6.2%, respectively.

“Technology fuelled rallies typically saw share prices rise ahead of earnings and this year, with ample liquidity and lower interest rates, we see valuation re-rating opportunities ahead for AI-related names,” said UBS strategist James Wang.

“The internet companies are likely to be longer-term beneficiaries of cheaper AI models and remain attractive given the cheap valuation and capital return initiatives on offer,” Wang said.

AI-shares traded onshore were up 0.9%, outperforming other sectors.

Global investors are starting to reassess China’s investability within the tech and AI space, as US-China competition has expanded from trade or tariffs to high-end manufacturing and AI, said equity strategists at Morgan Stanley.

Shares of Chinese bubble tea maker Guming were roughly flat on the Hong Kong Stock Exchange trading debut after the company raised US$232 million in an initial public offering.