The Chinese AI large language model sector staged a powerful counter-trend rally in the Hong Kong stock market.

KNOWLEDGE ATLAS (ASX: 02513) faced its first post-listing lock-up expiry, yet the market's typical logic of "lifted restrictions inevitably leading to price drops" completely failed this time—its stock price surged over 19% intraday, with MiniMax also rallying around 17% in sync. Analysis points out that the substantial lock-up expiry did not trigger a liquidity stampede, as core institutional investors collectively expressed intentions for long-term holdings, indicating Wall Street's mainstream capital is forming a systematic recognition of Chinese AI model companies.

Simultaneously, JPMorgan raised its target price for KNOWLEDGE ATLAS from HK$1,800 to HK$2,000, maintaining an "Overweight" rating. Meanwhile, three other major international investment banks—Goldman Sachs, Bank of America, and Citi—issued "Buy" ratings for MiniMax during the same period.

The strong performance of these two leading AI model stocks reflects a broader surge in Hong Kong's tech sector. Today, the Hang Seng Tech Index opened higher and maintained its gains throughout the session, closing up nearly 5%. Alibaba Group Holding Ltd surged over 12%, Hua Hong Semiconductor Ltd rose over 10%, Lenovo Group Ltd gained over 9%, while Semiconductor Manufacturing International Corporation and Kuaishou Technology both advanced over 8%. Tencent Holdings Ltd saw its stock price jump over 4% at one point.

Key Drivers Behind Hong Kong's Rally

Market analysts attribute the current strength in Hong Kong stocks to two primary drivers. First, the relatively low valuations of Hong Kong-listed stocks present an attractive opportunity. Second, the ongoing significant downturn in the global memory chip sector has prompted capital outflows from those areas into the Hong Kong market.

Furthermore, supportive policy signals have bolstered market sentiment. The Governor of the People's Bank of China, Pan Gongsheng, delivered a speech at the "Hong Kong Fixed Income and Currency Summit and Bond Connect Forum," outlining plans across four key areas: deepening financial market connectivity, supporting the prosperity of Hong Kong's capital market, consolidating its status as an offshore renminbi hub, and maintaining financial stability in Hong Kong.

Institutional Confidence Overcomes Market Fears

The market reaction to KNOWLEDGE ATLAS's lock-up expiry defied the long-standing expectation in both A-share and Hong Kong markets that such events inevitably lead to price declines.

The total volume of restricted shares becoming eligible for sale was 25.68 million. Key institutional investors, including JSC International Investment Fund SPC (under Beijing Financial Holdings Group), WT Asset Management, and Optimas Capital Limited, along with early shareholder and cornerstone investor Lingyun Guang Technology Co., Ltd., have all expressed their intention to hold the shares for the long term.

Regarding MiniMax, its largest strategic shareholders, Alibaba and miHoYo, also affirmed their long-term confidence in late June. Notably, MiniMax's founding team voluntarily agreed to a 12-month lock-up period, exceeding the industry standard of 6 months, meaning the initial expiry did not involve shares held by the founders or employees.

The substantial price increases were not merely driven by short-term trading sentiment but represented a market reassessment of the companies' long-term value, fueled by clear signals of capital commitment. Public statements from multiple core institutional investors before and after the lock-up expiry, choosing to hold rather than sell, effectively alleviated market concerns about a potential liquidity squeeze.

Wall Street's Bullish Stance Provides Fundamental Support

JPMorgan's upgraded rating provided crucial fundamental support for the rally. The bank raised its target price for KNOWLEDGE ATLAS to HK$2,000 (from HK$1,800) through December 2026, maintaining its "Overweight" rating. Its core rationale is that the GLM-5.2 model strengthens the thesis that "commercializing open-weight models can create significant optionality value for leading model providers."

JPMorgan also noted that, based on current valuations, the market has largely priced in KNOWLEDGE ATLAS's guidance for $1 billion in Annual Recurring Revenue (ARR) by year-end. Further upside potential depends on whether its powerful open-weight model can achieve scale through external infrastructure and distribution channels.

For MiniMax, the simultaneous "Buy" ratings from Goldman Sachs, Bank of America, and Citi are noteworthy, especially in a market environment where the AI sector is experiencing increased divergence.

Goldman Sachs set a target price of HK$860 per share, focusing on changing pricing dynamics in China's AI industry. The bank highlighted that DeepSeek V4's upcoming introduction of peak-hour differential pricing—with API prices doubling during peak times—is an early sign of rationalization following an aggressive industry price war that began in late April 2026. In this context, MiniMax's M3 model, benefiting from a higher proportion of self-built optimized computing power and an efficient architecture with fewer activated parameters, boasts significantly higher gross margins than its peers.

Bank of America set a target price of HK$500 per share, revealing an important shift in MiniMax's revenue mix. The company's revenue has transitioned from being approximately 70% consumer-focused last year to a growing proportion from enterprise and cloud API businesses, which are now prioritized as higher strategic focuses. On profitability, the previous-generation M2.7 model ultimately achieved over 40% inference margin. Bank of America expects long-term margins to remain stable through continued improvements in infrastructure efficiency. Regarding computing power access, MiniMax, through partnerships with global and emerging cloud service providers, uses overseas local computing resources to serve international users and maintains stable access to computing power.

Citi assigned a target price of HK$533 per share, noting that the current stock price implies an expected upside of 53.8%. The bank anticipates MiniMax will maintain a high revenue growth rate and believes its upcoming next-generation video model could be a key catalyst for shifting market sentiment.