China's stock markets continued their positive momentum on Monday, with the Shanghai Composite rising 0.6% to 3,933.37 and the blue-chip CSI300 gaining 0.4% by midday, according to Reuters. The ChiNext Composite rose 0.9% and Shanghai's technology-focused STAR50 index added 0.4%, while the CSI AI Index climbed 1.1%. In Hong Kong, the rally was broad-based with China's property sector surging 4.6% and defence stocks gaining 1.7%, as reported by Reuters. The latest gains build on Friday's strong performance when the CSI300 index of large-cap stocks and Shanghai Composite both rose around 1%, putting them on track for their biggest single-day gains since mid-August.
Technology, AI and semiconductor stocks emerged as the primary drivers of Monday's market surge, with the CSI Integrated Circuits Index surging about 5% and the CSI AI Index gaining roughly 3%, according to The Economic Times. This follows Friday's strong performance where Cambricon Technologies surged 6%, SMIC gained 4.2% (Shanghai-listed) and 4.4% (Hong Kong-listed), and NAURA Technology added 3.8%. The strength in technology shares reflects continued investor interest in China's domestic AI and chipmaking industries, particularly as the country seeks to expand its technological capabilities amid restrictions on access to advanced U.S. technology. Shanghai's tech-focused Star50 index jumped 4.1% and the ChiNext Composite index rose 1.96% to 3,311 on Wednesday, while consumer electronics also participated with Luxshare Precision up 2.7%, BOE Technology 2.1%, and Foxconn Industrial Internet 3.2%. Latest data shows SMIC up 2.85%, Hygon Information Technology 4.04%, Zhongji Innolight 3.40%, and NAURA Technology 3.16% leading the gains, as reported by Business Standard.
The upcoming summit between U.S. President Donald Trump and Chinese President Xi Jinping has become a key focus for markets, with U.S. Trade Representative Jamieson Greer indicating that the two countries could make announcements related to agriculture and non-tariff barriers, as reported by The Economic Times. Investors are also watching for progress on the previously agreed reciprocal tariff reduction covering $30 billion in goods. The upcoming meeting comes as both governments seek greater stability in a relationship strained by trade disputes, technology restrictions and other geopolitical issues. Reuters has reported that artificial intelligence and advanced chip access are also expected to feature in the discussions, adding to the sector-specific optimism driving current market gains. Reports that the US may delay new tariff announcements until after next weeks summit also supported sentiment, according to Business Standard. Investors are closely watching this weekends talks between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, ahead of the September 24 meeting between Donald Trump and Xi Jinping, with AI competition and China's access to advanced US chips expected to be key topics.
Healthcare stocks rose more than 3% following a Reuters report that the United States is working on rules governing pharmaceutical companies' investments in China, as reported by Reuters. The proposed rules would likely allow companies to continue entering into most licensing agreements involving Chinese drugs, providing clarity for the healthcare sector. China's property sector was among the strongest performers, surging 4.6%, while defence stocks gained 1.7%, according to Reuters. This diversification beyond technology into other sectors demonstrates the broad-based optimism surrounding potential trade truce extensions and improved U.S.-China relations.
The semiconductor sector experienced significant gains following Beijing's announcement of its 15th Five-Year Plan for the Development of Electronic Information Manufacturing, covering 2026-2030. The comprehensive plan targets combined revenue of more than 30 trillion yuan ($4.4 trillion) by 2030 for eligible large electronic-information manufacturing companies and calls for industry research-and-development investment to reach 3.5% of revenue. The policy identifies integrated circuits, advanced computing, consumer electronics, basic electronics and energy electronics as priority areas, with Beijing's policy push spanning the entire semiconductor supply chain including chip design, manufacturing, advanced packaging and testing, semiconductor equipment and materials, and electronic design automation. The plan calls for breakthroughs in high-end processors, memory and analog chips, providing comprehensive support for domestic semiconductor development. China expanded semiconductor foundry capacity by 15% in 2024 and is scheduled to add another 14% in 2025, with major domestic manufacturers including SMIC, Hua Hong and Nexchip increasing mature-node production capacity to address demand across consumer electronics, industrial systems and automotive applications.
