Shanghai Composite Index up 0.5%, Shenzhen Component Index up 0.37%, ChiNext Index closed up 0.34% at close

Shanghai Composite Index up 0.5%, Shenzhen Component Index up 0.37%, ChiNext Index closed up 0.34% at close

The Chinese stock market experienced a strong rally on Friday, with the Shanghai Composite Index rising 0.5% to above 3,530 points and the Shenzhen Component Index increasing 0.37% to 10,920 points [1]. This marked the second consecutive session of gains for mainland stocks, reaching multi-month highs amidst positive global risk sentiment and ongoing AI-driven optimism.

The market's momentum was fueled by robust US economic data, including a rebound in retail sales and better-than-expected jobless claims, as well as upbeat corporate earnings [1]. Additionally, investor sentiment improved after US President Trump softened his rhetoric towards China, boosting hopes for a potential trade deal [1].

AI-related stocks led the charge, surging 1.3% to a four-month high, buoyed by Nvidia’s H20 chip shipment resumption and optimism from Taiwan after TSMC raised its full-year outlook on booming AI chip demand [1]. Top gainers included Contemporary Amper (1.6%), Zhongji (5.9%), and Eoptolink (3%) [1].

On Tuesday, the market closed mixed, with the Shanghai Composite Index down 0.42% and the Shenzhen Component Index up 0.56% [2]. Analyst Timothy Pope noted that the economic data was mixed, with resilient growth numbers being welcomed but already priced in. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, gained 1.73% to close at 2,235.05 points [2].

The market experienced a day of volatile and differentiated trading on Wednesday, with the Shanghai Composite Index falling 0.42%, the Shenzhen Component Index rising 0.56%, and the CSI Innovation Index rising 1.73% [3]. The AI sector, particularly AI hardware and application stocks, saw significant gains, while power stocks adjusted collectively. Eoptolink Technology hit the daily limit and set a new all-time high, reflecting strong demand for AI computing hardware [3].

The market continued to fluctuate and diverge on Thursday, with mixed performance among the three major indices and a slight increase in trading volume. The full-scale breakout of the AI industry chain boosted the ChiNext Index, but the divergence between the yellow and white intraday lines remained evident, with over 4,000 stocks still falling by the close [3].

The market outlook remains positive, with the current rebound showing resilience despite increased short-term volatility. The AI computing power sector continues to attract significant investment, with companies such as Xinyisheng, Shenghong Technology, and Avary Holding hitting new historical highs. The strength of the recovery from high-level losses remains a key point to watch.

References:
[1] https://www.tradingview.com/news/te_news:471104:0-chinese-stocks-rallies-for-second-session/
[2] https://www.bastillepost.com/global/article/5031349-analyst-recaps-chinese-stock-market-performance-on-tuesday
[3] https://www.metal.com/en/newscontent/103428735