China's ChiNext index falls 3% to 2,812.32

China's ChiNext index falls 3% to 2,812.32

The China National Equities Exchange and Quotations (ChiNext) index fell by 3% to 2,812.32 on September 2, 2025, reflecting a broader market trend amidst geopolitical shifts and economic uncertainties. The decline comes as investors digest the latest developments in the global energy market and the semiconductor industry.

The primary driver of the market's volatility is the geopolitical agreement between Russia and China. Russian President Vladimir Putin and Chinese President Xi Jinping announced a deal to build the “Power of Siberia-2” pipeline, which will deliver 50 billion cubic meters (bcm) of gas annually to China at half the rates currently supplied to European Union nations [2]. This deal, which aims to bolster Moscow’s war economy and reduce its reliance on European markets, has significant implications for global energy dynamics and could impact China’s economic outlook.

Meanwhile, L&T Semiconductor Technologies, a subsidiary of the L&T Group, is considering entering the Chinese market by FY27. The company plans to outsource chip production to local fabs and target $1 billion in revenue, while also weighing IPO plans following a $500 million milestone [1]. This strategic move could have a positive impact on China’s semiconductor industry, given the growing demand for advanced chips.

The semiconductor sector's potential expansion in China coincides with a robust performance by mainland Chinese companies listed onshore. These companies recorded a total net profit of 3 trillion yuan (US$420 billion) in the first half of the year, an increase of 2.5% from the previous year [3]. This performance reflects a more optimized business structure, a sharper focus on technology and innovation, and increasing shareholder returns.

Despite the positive earnings reports, the overall revenue of non-financial companies remained relatively stable, with a slight increase of 0.9% from the previous year. The ChiNext index's decline may also be attributed to the broader economic slowdown, tariffs, and the sluggish real estate sector, which have exerted pressure on corporate profit growth.

Investors should closely monitor these developments as they may continue to influence the market's trajectory. The semiconductor industry's entry into China, coupled with the geopolitical shifts in energy supply, could present both opportunities and challenges for the global economy.

References:
[1] https://www.business-standard.com/companies/news/lt-semiconductor-technologies-eyes-china-market-expansion-125090101331_1.html
[2] https://www.oneindia.com/videos/putin-makes-eu-pay-gas-energy-supply-at-double-rates-power-of-siberia2-advantage-to-china-4261999.html
[3] https://www.scmp.com/business/companies/article/3324136/mainland-chinese-listed-companies-first-half-profit-rises-25-3-trillion-yuan?module=top_story&pgtype=homepage