China, Hong Kong stocks gain as AI shares rally ahead of Xi-Trump meeting

Mainland China and Hong Kong stocks experienced a surge on Tuesday, propelled by gains in AI shares, following US and Chinese officials' agreement to hold further discussions on AI safety. As investors turned their attention towards a top leaders' meeting later in the week, the benchmark Shanghai composite index edged up 0.2%, while the blue-chip CSI300 index rose by 0.5%.

The smaller Shenzhen index also saw an increase of 0.5%, with the ChiNext Composite index gaining 0.9% and Shanghai's tech-focused STAR50 index climbing 1.3%.

AI shares were the primary drivers of the morning rally, with a sub-index soaring 2.3%. US and Chinese officials were set to meet again in approximately two months in Shenzhen, China, to discuss the potential risks associated with artificial intelligence and establish communication protocols for addressing safety incidents. US Treasury Secretary Scott Bessent indicated on Monday that while expectations for the upcoming state visit by Chinese President Xi Jinping to the US from September 23 to 25 were modest, the focus would be more on the symbolism of the trip rather than tangible outcomes.

In Hong Kong, the Hang Seng index climbed 0.4%, with tech shares experiencing a 1% increase. Alibaba Group shares even reached a one-month high at one point during the day, after the company's CEO Eddie Wu revealed that the company aimed to surpass 20 GW of cloud global data center capacity by 2032.