stock market Photo:VCG
China’s tech-heavy STAR 50 Index, tracking the 50 largest and most liquid stocks on the high-tech board, soared to a record high on Wednesday fueled by extraordinary financial performances of semiconductor, artificial intelligence (AI) and battery companies.
Market analysts said that they are optimistic about the outlook of China’s stock market, betting on opportunities from the rapid technological development and robust economic resilience of the world’s second largest economy.
On the first trading day after the 5-day May Day holidays, the STAR 50 Index surged 9 percent in intraday trading. Shares of chip developer Hygon Information Technology Co Ltd saw intraday gains of 20 percent, while integrated circuit design firm Montage Technology and chipmaker Biwin Storage Technology Co Ltd were both up 16 percent. The index closed 5.47 percent higher at 1,656.95 points.
As China accelerates the development of new quality productive forces, the strong financial results of those companies is mainly driven by rapid iteration in AI applications, rising demand for advanced semiconductor manufacturing equipment and computing power, and a continued recovery in new-energy materials, Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Wednesday.
Yang said that the recent bull runs for A-shares and H-shares will likely continue this year, with Chinese high-tech companies bringing more investment opportunities and attracting continuous inflows of foreign capital.
According to Shanghai-based financial data provider Wind Information, the qualified foreign institutional investors’ (QFIIs) holdings are mainly focused on sectors including banks, electronics, and telecommunications.
The electronics sector saw the largest increase in the number of shares held by QFIIs in the last three months, led by telecommunications sector which recorded the highest growth in the market value of QFII holdings, up by 10 billion yuan ($1.46 billion), the Securities Daily reported.
Foreign financial institutions told the Global Times on Wednesday that China’s economic and financial resilience has been evident this year. The country’s full-year growth is projected to stay within the target range of 4.5-5 percent, underpinning the stock market. The institutions are upbeat on sectors including AI technology, energy, and raw materials.
China’s GDP growth rate of 5 percent year-on-year in the first quarter exceeded market expectations, according to a note released by Goldman Sachs on April 24. It highlighted notable resilience in Chinese financial markets despite external uncertainties.
There are offsetting factors and policy tools that the Chinese government can use to keep economic growth within its target range for the remainder of 2026, for instance, China’s advantages in new-energy products, resilient supply chains, and policy flexibility, according to the note.
Chinese stocks closed broadly higher on Wednesday, with the benchmark Shanghai Composite Index up 1.17 percent at 4,160.17 points. The Shenzhen Component Index closed 2.33 percent higher at 15,459.62 points. The ChiNext Index, tracking China’s Nasdaq-style board of growth enterprises, gained 2.75 percent to close at 3,778.16 points.
Wang Zonghao, head of China equity strategy research at UBS, forecasted more appreciation in both the A-shares and H-shares over the coming two months, noting that the A-share market is expected to benefit from robust profit expansion in the industrial sector, according to a note sent to the Global Times.
The analyst pointed to investment opportunities in AI hardware, electricity equipment, and non-ferrous metals.
“As the Iran conflict has driven up global energy and commodity prices, corporate profit margins may be under pressure in the next few quarters. However, this is a global headwind, and Chinese enterprises will feel less impact compared with those from other regions,” read the note, outlining reasons including China’s ample strategic petroleum reserves and greater adoption of renewable energy and electric vehicles.
