Shanghai stocks hover 10-year highs; HK rallies on Alibaba’s AI-led growth

SHANGHAI: Shanghai stocks flirted with fresh 10-year highs, while Hong Kong shares climbed on Monday, supported by Alibaba after the e-commerce company reported strong AI-driven growth, as investor confidence in Chinese innovation continued to build.

• Sentiment on the mainland was also aided by regulators’ pledge to “consolidate good trend” of the stock market, which jumped 10% in August in its best month in almost a year.

• The Shanghai Composite Index edged 0.1% higher by the midday break. The blue-chip CSI300 Index was roughly flat.

• Hong Kong’s benchmark Hang Seng Index jumped nearly 2%.

• The gains were driven by a 17% surge in index heavyweight Alibaba, after the tech company said artificial intelligence was key to the growth of its cloud computing business.

• China Europe Capital Chairman Abraham Zhang said that Alibaba’s progress in AI, including its breakthrough in AI chips, “will have far-reaching implications to China’s entire AI value chain,” and represents a “watershed moment” for China’s AI industry.

• Gains in the index were also supported by growing expectations of a US interest rate cut later this month.

• China’s CSI AI Index rose 1.3% to a record high on Monday, while Shanghai’s STAR Semiconductor Index jumped more than 2%.

• Bets on homegrown chipmakers were also strengthened by news that the US is making it more difficult for chipmakers Samsung and SK Hynix to produce chips in China by imposing curbs on exports of US equipment.

• Biotech shares jumped in China and Hong Kong on growing optimism about Chinese innovation. ** Banking shares softened, after China’s major state-owned banks warned that net interest margins will face increased pressure for the rest of the year.

• Despite concerns the Chinese economy could come under greater pressure in the second half of the year, analysts said “China’s bull run has legs,” as valuations remain modest while there are few signs of retail euphoria.

• China’s securities regulator said on Friday that it would continue to consolidate upward trend of the market and make the market more appealing to long-term investors.