China’s ChiNext index rises 3% to 2,912.46

China’s ChiNext index rises 3% to 2,912.46

The ChiNext index, a technology-focused index in China's Shenzhen Stock Exchange, rose 3% to 2,912.46 on July 2, 2025. This increase was driven by several factors, including strong earnings reports from key companies and supportive market conditions.

Key drivers behind the index's rise include robust Q2 earnings from Trip.com, a leading online travel agency. Trip.com's adjusted net income and earnings per share (EPS) exceeded analyst expectations, leading to a stock buyback of $5 billion, which accounts for 12% of the company's market cap [1]. This positive performance contributed to the overall bullish sentiment in the market.

Additionally, the Shanghai Composite Index has been on a rally, reaching levels not seen since 2015. The index is up about 25% from April lows, driven by institutional investors and ample dry powder [2]. This rally has been supported by state-backed institutions and bigger investors, with retail money gradually rotating into stocks.

The ChiNext index's rise also reflects broader market trends. Mainland China's stocks have outperformed overnight despite the weakening US dollar. The 22 most heavily traded stocks by value ended with gains, with nine gaining more than 10%. This performance was led by semiconductor stocks, such as Semiconductor Manufacturing (SMIC) and Cambricon Technology, which gained +17.45% and +15.73%, respectively [1].

The government's support for urban development and tech innovation has also played a role in the market's optimism. The State Council and the Central Committee of the Communist Party of China announced support for urban development and "mega cities," which has led to a main engine for high-quality development by supporting tech and scientific innovation [1].

Despite these positive indicators, retail investors and foreign money have not rushed into the market. Data shows that retail investors are not opening new accounts, and foreign investors have not invested heavily in China onshore stocks so far this year [2]. This suggests there is still ample money sitting on the sidelines that could jump in, potentially driving further growth.

References:
[1] https://www.forbes.com/sites/brendanahern/2025/08/28/china-market-update-a-sky-full-of-star-board-tripcom-beats/
[2] https://www.investing.com/news/economy-news/chinese-stocks-at-decade-high-lure-hesitant-retail-investors-4212160