Zhipu, Minimax Poised to Enter HK Tech Gauge, Boosting AI Sector Bets

China's Hottest AI Stocks Poised for Inclusion in Hong Kong Indexes

China's hottest AI stocks, Knowledge Atlas Technology Joint Stock Co. (also known as Zhipu) and MiniMax Group Inc., may be among the candidates for inclusion in Hong Kong's stock gauges, opening access to trading links that could trigger billions of dollars in inflows.

Both stocks have rallied at least 300% each since listing in January, with Zhipu and MiniMax viewed as leading contenders for inclusion into the Hang Seng Tech and composite gauges when Hang Seng Indexes Co. conducts its quarterly review on Friday. An entry into the indexes would make Zhipu eligible for the stock connect program as early as June 8 under fast-entry rules, while MiniMax may qualify in August given stricter requirements on firms with weighted voting rights.

According to Bloomberg Intelligence, Zhipu may attract southbound buying of HK$51 billion ($6.5 billion) to HK$92 billion, while MiniMax could see flows of up to HK$47 billion. Mainland investors typically build stakes of 11% to 20% in major Hong Kong tech firms through trading links, and both stocks may attract similar levels of capital.

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Inflows from mainland investors, along with potential exchange-traded fund buying of about $4 billion, could help offset selling pressure ahead of share lockup expiries in July. Only 5% of MiniMax's total stock is freely tradable, with 65% of total shares to be available to the market in July, according to HSBC Holdings Plc estimates. For Zhipu, about 6% of total shares will be released from lock-up in July, and another 40% at the end of January.

For the broader Hang Seng Index, BeiGene Ltd., KE Holdings Inc., Zhaojin Mining Industry Co., and Yum China Holdings Inc. may be considered for addition, said Willer Chen, an analyst at Mizuho Securities. Meanwhile, Akeso Inc. may join the Hang Seng China Enterprises Index and Sunny Optical Technology Group Co. may be removed, he said.

Joining the tech gauge may put Zhipu and MiniMax on a path toward inclusions into other global and local indexes, said Brian Freitas, an analyst at Smartkarma. The first lockup expiry in July should increase float significantly, and the lockup expiry in January will bring more index inclusions and flows.

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