Chinese stocks end the week with high note; AI, tech sends Shanghai stocks to decade high
A concept photo of China’s stock market Illustration: VCG
Chinese stocks capped a week of gain on Friday, with the Shanghai benchmark index closing at its highest point in a decade. Chinese analysts said the performance highlighted the effectiveness of government policies aimed at stabilizing the capital market and expectations.
The steady growth of the Chinese capital market also reflected rising confidence among investors on the back of the resilient performance of the Chinese economy, which grew 5.3 percent in the first half, as well as robust growth from innovation sectors, they said.
Chinese stocks rallied on Friday, with the Shanghai Composite Index up 1.45 percent to 3,825.76 points, breaking through the 3,800-point mark and hitting a new 10-year high. The STAR 50 Index soared over 8 percent, reaching a more than three-and-a-half-year high, the Securities Times reported on Friday.
The Shenzhen Component Index rose 2.07 percent to 12,166.06 points while the ChiNext Index climbed 3.36 percent to 2,682.55 points.
The semiconductor sector, securities, insurance, and other sectors led the rally, with particularly active performances by stocks in chips, computing power, and the artificial intelligence (AI) industry chain, the report said.
Strong fundamentals
Chinese and foreign analysts have noted that the recovery of the Chinese A-share market is rooted in the positive outlook of the Chinese economy, which has fared well so far this year despite external pressure including trade conflicts with the US and domestic challenges.
“The recent stock market surge reflects China’s stable economic growth, acting as a barometer of the macroeconomy. This upward trend underscores the resilience and long-term positive trajectory of China’s economy, despite external challenges like the US-provoked tariff war, which have not altered its intrinsic development logic,” Li Chang’an, a professor at the Academy of China Open Economy Studies at the University of International Business and Economics, told the Global Times on Friday.
Li added that short-term fluctuations in the country’s economic performance are seen as temporary, with economic resilience driving both growth and market performance.
“The country is aimed at building itself into a financial powerhouse as part of its efforts to pursue high-quality development, with a series of supportive securities market policies introduced. These policies, accumulating over time, have reached a breakout phase, significantly boosting stock market performance,” Li noted.
As global economic and trade development continues to face significant uncertainties, China’s foreign trade has seen steady growth in the first seven months.
On Thursday, asked to comment on China’s recent economic data for July, including stellar trade figures, and a certain analysis that China’s trade will continue to be under pressure amid tariff and other external impacts, Chinese Foreign Ministry spokesperson Mao Ning said that facts have proven that international trade based on comparative advantages enables common development and benefits all parties, and China’s quality products are popular around the world and its diversified and stable market is favored by many.
“This is not something that can be changed by tariff or trade wars,” Mao said, adding that China will continue to share its development opportunities with other countries through open cooperation for win-win results.
As of Wednesday, 663 A-share listed companies have released their half-year reports, with more than 430 reporting year-on-year growth in net profit, the Securities Times reported, citing the latest data from financial information service Wind.
Among these, 111 companies saw profits more than double, with the manufacturing and technology sectors showing notable resilience.
Rising expectations
Since the beginning of the year, foreign investors have increasingly been looking at the Chinese stock market in a positive light.
In February, Deutsche Bank analyst Peter Milliken wrote in a note that Chinese stock gauges would top prior highs in the medium term as the world wakes up to the competitiveness of its companies, led by catalysts such as the AI product DeepSeek and innovation in electric vehicles, Bloomberg reported earlier.
In the following months, multiple international investment banks expressed optimism about China’s development opportunities, upgrading the rating of Chinese assets from neutral to overweight.
The A-share market has been increasing steeply in August, reflecting a money-making effect with major indices breaking above their October 2024 highs as investors come off the sidelines, Lei Meng, China equity strategist with UBS Securities, wrote in a note sent to the Global Times on Friday.
Lei noted that while the balance of margin financing for A-share stocks has been climbing, the balance as a percentage of free float market capitalization remains far below the mid-2015 level. The data also suggested leveraged investors are optimistic about market performance.
The market is also having stronger overall liquidity as Chinese households have amassed over 7.2 trillion yuan in excess savings since 2020, according to Lei.
In a research note Tuesday, analysts with Morgan Stanley wrote that “better liquidity, rotation from bonds and savings, and hope for easing are major drivers” for the Chinese capital market, with the onshore bond yield uptick suggesting an improved investor outlook for the long-term macroeconomy.
The positive outlook is underpinned by the country’s accelerating industrial transformation and structural upgrades, with notable progress in technological innovation driving substantial growth potential in emerging sectors, analysts said.
Studying the half-year reports of numerous listed companies, the Securities Times reported on Wednesday that more than 70 listed companies had Qualified Foreign Institutional Investors (QFIIs) among their top 10 tradable shareholders, with a total shareholding value of about 6.8 billion yuan, highlighting the greater pace with which foreign institutional investors are increasing their holdings.
From January to June, net foreign direct investment into Chinese equities and mutual funds reached $10.1 billion, reversing the net reduction trend of the previous two years. In May and June, the net increase in holdings reached $18.8 billion, indicating a stronger willingness of global capital to increase allocations to the domestic stock market, Jia Ning, an official of the State Administration of Foreign Exchange, said in July.
Li said the market’s rise serves as a leading indicator of improved economic confidence and expectations, signaling investors’ optimism about future investment and consumption environments.
Looking ahead to the second half of 2025, high-tech industries, including the semiconductor sector and robot industry, will be key drivers of economic growth. The “three new economies”, especially new quality productive forces, will play a pivotal role in sustaining China’s economic momentum, aligning with the market’s focus on technology-driven growth, Li noted.