Optical communication shares lift China stocks on US AI gains

SHANGHAI: China stocks rose on Thursday, led by co-packaged optics shares, tracking gains in US AI giants after they posted upbeat forecasts on hardware demand.

Hong Kong shares were roughly flat.

China’s blue-chip CSI300 Index climbed 0.5% by the lunch break, while the Shanghai Composite Index gained 0.4%.

Hong Kong benchmark Hang Seng was up 0.1%.

Optical module leaders Eoptolink Technology, TFC Optical Communication, Zhongji Innolight rose 4.2%, 10.5%, and 5.5%, respectively, after US listed CoreWeave and Super Micro Computer posted upbeat forecasts that signaled booming demand for AI computing capacity.

The rally also came as US optical communication giant Lumentum gained nearly 14% in New York.

The 5G Communication Index and the tech-focused STAR50 Index rose nearly 3% and 2%, respectively.

China’s memory chip giant CXMT gained 1.3%.

Onshore financial shares held steady after China’s central bank said on Wednesday it would maintain an appropriately loose monetary stance and roll out practical, effective measures as needed, but stopped short of signaling explicit cuts to policy rates or banks’ reserve-requirement ratio.

Tech majors listed in Hong Kong edged up 0.3%.

Shares of Tencent Holdings fell 3.8% to a two- week low after the company reported a record quarterly negative free cash flow while raising its capital expenditure on AI investments.

“Investors are concerned that weak consumption trends may limit ad-load expansion and revenue growth, while AI investments may take longer to generate commensurate returns,” UBS analysts said in a note to clients.

Materials shares fell 3.6%, dragged by gold mining companies. China Gold International Resources slumped 5.9%.