Hong Kong’s stock and initial public offering markets kicked off 2026 on a strong note on Friday, with the benchmark Hang Seng Index (HSI) rising more than 700 points, driven by rallies in semiconductor, internet and vehicle shares.

The HSI opened higher and widened its gains during afternoon trading before closing up 2.76 percent at 26,338.47, its biggest single-day gain since May 12. The Hang Seng Tech Index surged 4 percent, and the Hang Seng China Enterprises Index, which tracks Chinese mainland firms listed in the city, advanced 2.86 percent.

Semiconductor stocks led the advance. Hua Hong Semiconductor surged 9.42 percent, while SMIC gained more than 5 percent. Search engine operator Baidu increased over 9 percent to become the best-performing blue-chip stock after the company said its artificial intelligence chip unit, Kunlunxin, had confidentially submitted an application for a Hong Kong listing.

China Galaxy Securities said the country’s push to localize its semiconductor supply chain has been elevated to an “unprecedented” level of importance amid external pressures. The ongoing structural tightness in global chip manufacturing is accelerating the reshoring of production to China, while the construction of domestic production lines is creating more opportunities for local suppliers to test and use their own equipment and materials, the brokerage added.

Moreover, it said the market share of domestically developed chips is expected to rise significantly, driven by strong policy support in China and demand released by the continued narrowing of North America’s exports on computing power.

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Futu Securities also said the AI chip market enjoys great growth potential. It expects Chinese companies’ share of the AI chip market to rise to 60 percent by 2029, with robust demand from data centers, telecommunications and fintech firms that require high computing power.

Consumer-related stocks also strengthened after the National Development and Reform Commission and the Ministry of Finance said earlier this week that subsidy programs for vehicle trade-ins and home appliance replacements will be extended into 2026 with refinements. TV maker Skyworth Group and electric-vehicle manufacturer Li Auto both gained around 5 percent.

The subsidy policies will help stabilize the auto market and ease consumers’ “wait-and-see” sentiment, which is conducive to carmakers and parts suppliers, according to brokerage firm Huajin Securities.

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The IPO market also opened the year strongly. Shanghai Biren Technology, a Chinese mainland AI chipmaker, jumped as much as nearly 120 percent in its Hong Kong trading debut on Friday, marking the financial hub’s first listing of 2026 amid growing investor appetite for domestically developed AI computing power.

Biren ended at HK$34.5 ($4.4), up more than three-quarters from the offer price, giving the company a market capitalization of over HK$81 billion.

The public offer, which closed on Dec 29, attracted about 471,000 applications and was oversubscribed more than 2,347 times. This is reportedly the highest level of retail participation for a Hong Kong IPO in the past year.

Biren raised gross proceeds of about HK$5.58 billion, making it the largest Specialist Technology listing under Chapter 18C of Hong Kong’s listing rules since the framework was introduced.

Dubbed one of China’s “four little dragons” in the high-performance graphics processing unit (GPU) sector, Biren had an order pipeline representing potential revenue of more than 2 billion yuan ($290 million) as of mid-December. They are mainly related to intelligent computing solutions for clients in telecommunications, AI data centers and the internet sector.

Biren’s listing comes amid a wave of domestic GPU firms tapping the capital markets. It is the third Chinese GPU company to go public, following Moore Threads and MetaX on Shanghai Stock Exchange’s STAR Market, and marks the first time a homegrown GPU developer has listed in Hong Kong.

At least 10 more companies are set to list in Hong Kong this month, including large-model developer Knowledge Atlas Technology Joint Stock Company and GPU supplier Shanghai Iluvatar CoreX Semiconductor, both due to debut on Jan 8.

Contact the writer at irisli@chinadailyhk.com