The market experienced a significant reversal. After threats of escalating conflict yesterday, a sudden announcement of a two-week ceasefire was made. This pattern is familiar: applying maximum pressure followed by negotiations. All parties involved claimed victory. Regardless, the market narrative shifted positively, and global investors who followed suit benefited handsomely. Global stock markets responded positively, with the Hong Kong market gapping up and surging 3.09%. Trading volume also expanded significantly to HKD 372.4 billion.
The catalyst was a major declaration stating that bombing and attacks would be suspended for two weeks, contingent upon the full, immediate, and safe reopening of a key strategic strait. This precondition was set relatively low, indicating a genuine intent to de-escalate and create breathing room. Concurrently, the opposing nation's top security committee stated it accepted a ceasefire proposal from a mediating country, though it presented a ten-point plan. Core demands included full compensation for losses based on assessments and the withdrawal of US combat troops from all regional bases and deployment points. The response to the plan was that it could serve as a basis for negotiations, with consensus reportedly reached on many previously contentious issues. However, a senior official from the opposing nation warned that if their conditions were not accepted, their supreme leader would not approve the ceasefire agreement, and the strait would not return to its previous state. Talks are scheduled to proceed in a neutral location.
Today's market rebound primarily reflects the shift towards a negotiating phase, suggesting a lower probability of major aggressive actions in the short term. However, conflict persists between other regional actors. The outcome of the negotiations remains highly uncertain. Key questions linger, such as whether core demands will be accepted or if significant compromises will be made. The immediate market impact of the ceasefire was a drop in oil prices and a sharp rise in gold. Spot gold surged intraday, touching a high. Consequently, gold mining stocks like China Gold International and Chifeng Gold saw substantial gains of nearly 11% and over 8%, respectively. The broader metals sector was also lifted, driven by the logic that lower oil prices ease inflation, increase the probability of interest rate cuts, weaken the US dollar, and thus strengthen metal prices. Miners such as MMG and China Molybdenum gained over 10%.
Technology stocks, exhibiting high elasticity, led the rally, reminiscent of previous market movements. A new AI video model, dubbed "Happy Horse," unexpectedly topped a leading benchmark platform, surpassing established competitors. It reportedly leads in visual consistency, motion naturalness, and audio synchronization while being priced at half the cost of its main rival. The model's origin is currently unknown, sparking market speculation that it may be from a Chinese team, with Alibaba's research lab being a prime suspect. Alibaba's stock rose over 6%. Meituan's executive highlighted the initial step for merchants adopting AI is to "enable AI to understand your store," and the stock gained over 10%. The rapid, large-scale deployment of various AI agents and applications is solidifying a commercial model based on charging for computational usage and related AI infrastructure services. This usage is expected to see both volume and price increases. An investment bank significantly raised the target price for a key company in this space by approximately 185%, and its stock surged over 17% today. Other AI-related firms, including Zhipu, Mobvista, and Kingsoft Cloud, also saw gains exceeding 11%. The upstream domestic chip sector rallied collectively, with Hua Hong Semiconductor, SMIC, Shanghai Fudan Microelectronics, and ASMPT all rising over 10%. Tianyue Advanced, a leader in silicon carbide substrates, jumped over 11%.
In other tech infrastructure news, a major social media company announced a €1 billion investment to build a new data center in Finland. A global optical fiber price surge has intensified, with prices in China rising over 400% from last year's lows. European prices also increased significantly. Analysts project a global supply-demand gap could widen by 2026-2027. With global production capacity near full utilization, manufacturers are prioritizing higher-value specialty fibers for applications like drones and AI data centers, exacerbating a structural shortage of standard fibers. Optical communication companies like Yangtze Optical Fibre and Cable, Wai Chi, and Cambridge Industries Group surged over 17%. AI data center construction is also driving power demand, boosting stocks like Harbin Electric, Dongfang Electric, and Wasion Holdings, all up over 10%.
Various AI hardware components saw broad gains. Memory chip-related stocks were particularly sought after, with leveraged products tracking SK Hynix and Samsung Electronics exploding over 46% and 34%, respectively. Montage Technology rose 14%. On April 3rd, a leading laminate manufacturer issued another price hike notice, increasing prices for all materials by 10% due to soaring chemical costs. This marks the company's third price increase this year, and its stock rose over 12%. The same day, a major Japanese materials company announced a comprehensive 30% price increase for its key electronic materials. A high-end PCB supplier surged nearly 22%, and a leading PCB equipment maker rose nearly 12%. Tianyue Advanced gained over 11%.
Reports of Apple entering the foldable phone market boosted the related supply chain. Research predicts global foldable shipments will grow significantly by 2026, with Apple potentially capturing a large market share upon release. Stocks across the supply chain strengthened, with Hongtai Precision surging over 19%, VSTECS gaining over 12%, and Q Technology and Lens Technology rising over 10%. Following the conclusion of a stabilization period for its A-share listing, a company was added to the Stock Connect program, and its stock rose over 8%.
Despite the announced two-week pause in hostilities, a fundamental deadlock over strait conditions remains unresolved. This has left a significant number of energy vessels and crew stranded, keeping global energy supply chains tight. In the short term, the market rebound is sentiment-driven. A fundamental economic recovery will require more time, presenting a window for investors to capitalize on the bounce.
Sector Focus: The 14th China Information Technology Expo is scheduled for April 9-11, 2026, in Shenzhen. Over 1,200 leading global companies and innovative teams will participate. The embodied intelligence section will feature prominent companies. Additionally, the expo will host its first AI robotics/hardware hackathon. It is worth observing if any breakthroughs in robotics emerge during the event. Key Hong Kong-listed companies to watch include DOBOT, ESTUN, UBTECH ROBOTICS, and ONEROBOTICS.
Stock Analysis: Kingsoft Cloud (03896): Strong Results, Explosive Growth in AI Cloud Business. The company reported full-year 2025 revenue of RMB 95.57 billion, a 22.8% increase. Q4 revenue was RMB 27.6 billion, up 23.7%. After adjustments in Q3 and Q4 2025, the company returned to profitability, with a gross margin of 17.1%. Analysis: The company's profitability reached a record high, driven by explosive growth in its AI cloud business. Public cloud revenue grew 34.9%, and industry cloud revenue increased 18.4%. In Q4 2025, AI cloud billings surged 95%, accounting for 49% of public cloud revenue. AI-related revenue exceeded 30% for the full year 2025. The company holds the leading market share in government cloud services, covering numerous provinces and districts, with stable orders. In gaming/video cloud, it supports a large portion of live streaming for major platforms, demonstrating strong early-mover advantage and customer loyalty. Strategic collaboration within its ecosystem continues to deepen, with revenue from this source growing 83.8% year-on-year. The company achieved adjusted operating profit and net profit in Q3 2025, marking its first quarterly profit on an adjusted basis. Furthermore, the company completed a new share placement in October 2025, raising approximately HKD 2.76 billion net, with 80% earmarked for AI business expansion, including infrastructure and cloud service capabilities. Technologically, its platform has been upgraded to a comprehensive AI training and inference platform, supporting nearly 40 different models and achieving a full-cycle service loop. The company's profitability is improving continuously, and its AI business is poised to accelerate into an inference-driven phase.
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