SHANGHAI: China stocks ended higher on Wednesday, as gains in AI supply-chain shares outweighed losses in consumer and financial shares, pointing to a deepening divergence between the new and old economies. Hong Kong shares fell.
China’s blue-chip CSI300 Index closed up 1 percent, while the Shanghai Composite Index rose 0.4 percent. Hong Kong benchmark Hang Seng was down 0.7 percent.
Semiconductor shares jumped 6 percent to an all-time high, leading gains onshore, while the 5G Communication Index climbed 2.5 percent.
In contrast, traditional sectors such as consumer staples and financials fell 1 percent and 0.6 percent, respectively. The coal index dropped 2.1 percent.
China’s May activity data points to a deepening “K-shaped” (where different parts of the economy move at different speeds or directions) divergence in the economy, with industrial output edging up but still near multi-year lows and domestic demand cooling notably in the second quarter, analysts at Huatai Securities said in a note.
But the K-shaped divergence could still widen further - not only between the new and old economy and between domestic and external demand, but potentially also between goods and services within domestic demand, between tier-one and nationwide property markets, and across regions - making the economy’s structural significance greater than its headline trajectory, they said.
Investors are also digesting remarks from top regulators at an annual forum in Shanghai. ** China’s top banking regulator vowed on Wednesday to prevent systemic financial risk and channel resources to emerging industries, as the country undergoes a painful economic restructuring.
The country’s central bank said that it would improve the mechanism for regulating short-term interest rates and promote the offshore yuan business in Shanghai.
Tech majors listed in Hong Kong were up 0.2 percent.