China equities extend rebound, led by chip stocks

SHANGHAI: Chinese stocks rose on Wednesday, led by AI and semiconductor shares, as investor sentiment remained upbeat following gains in the previous session that marked the sharpest rally in three months.

Hong Kong shares fell.

China’s blue-chip CSI300 Index climbed 0.7% by the lunch break, while the Shanghai Composite Index gained 0.5%. Hong Kong benchmark Hang Seng was down 0.8%.

The AI hardware supply chain remained the key theme for the onshore market, with the tech-focused STAR50 Index and semiconductor shares rising 1.5% and 3.4% respectively.

Shares of non-ferrous metal companies climbed nearly 5%, rebounding after underperforming the broader market over the past month.

Traditional sectors such as consumer staples and financials, fell 0.9% and 0.1%, respectively.

“Despite recent sharp fluctuations in A-shares, we think the trend for overall A-shares and tech earnings to keep improving remains intact,” said UBS analysts in a note.

“With the rapid decline in the balance of margin financing, we think A-share deleveraging may be largely complete,” they said.

The CSI300 and STAR50 indices had rallied 14% and 175% respectively from April to June, fuelled by investor enthusiasm for AI and hardware supply chain stocks, before giving back some of those gains in a correction over the past month.

Tech majors listed in Hong Kong fell 2.1%, led by a nearly 6% drop of Tencent shares.

Shares of Topsports International Holdings, China’s sports retailer, slumped more than 23%, after Nike said it would direct consumers to official Nike channels.

Chinese optical parts maker Zhongji Innolight aims to raise up to HK$55.05 billion ($7 billion) in a Hong Kong listing, in what would be Asia’s second-largest share sale this year, an exchange filing showed on Wednesday.

The company’s shares listed onshore were down 1.5%.