China stocks rise on upbeat factory data, AI-related export demand

SHANGHAI: China’s mainland shares rose on Tuesday, led by AI and semiconductor stocks, after stronger-than-expected factory activity pointed to resilient demand for high-tech exports, though Hong Kong stocks lagged.

China’s blue-chip CSI300 Index climbed 1.1% by the lunch break, while the Shanghai Composite Index gained 0.2%. Hong Kong benchmark Hang Seng was down 1.2%.  The 5G Communication Index was up 5.4%, while onshore semiconductor shares rose 2.6%.

The tech-focused STAR50 Index gained 3.5%.

China’s factory activity returned to expansion in June, driven by demand for chips, computers and other AI-related products, as robust export orders and front-loading to the United States to get ahead of tariffs offset weakness elsewhere in the economy.

The data eased near-term growth concerns but kept expectations for further policy support intact, UBS analysts said in a note, as recent activity indicators continued to point to an uneven consumer recovery.

The investment bank suggests investors watch signals from the July Politburo meeting.

Shares of Chinese memory chipmaker GigaDevice Semiconductor fell as much as 7% in early trade, while its Hong Kong-listed shares slumped 7.3%, after the company warned of the risk of further tightening in wafer capacity supply from upstream foundry partners.

Tech majors listed in Hong Kong were up 1.4%.

China’s stock market has split sharply this year, with AI supply-chain shares rallying to record highs while traditional sectors have been weighed down by weak domestic demand.

Onshore financial shares dropped 1.8%, while consumer staple stocks slipped nearly 2%.