CN20250207-Stock Markets Are Booming! Is the Bull Market Here?

China’s A-shares and Hong Kong stocks are surging, with the ChiNext Index soaring 3.63% in just half a day today. In the first two hours of trading, the total turnover in Shanghai and Shenzhen markets reached a massive ¥1.15 trillion. Could this be the start of a bull market?

1. Chinese Stocks Surge in the U.S. Market

Last night, global stock markets were anything but calm. The U.S. stock market saw mixed performance:

The Dow Jones slipped slightly by 0.28%
The Nasdaq and S&P 500 gained 0.51% and 0.36%, respectively

Meanwhile, OpenAI is pressing forward with its ambitious AI infrastructure projects, helping NVIDIA’s stock recover. But the real stars were Chinese stocks listed in the U.S., which rallied strongly. The Nasdaq Golden Dragon China Index, which tracks major Chinese companies listed in the U.S., surged 2.69%.

2. Bank of England Cuts Rates, European Markets Rally

The Bank of England cut interest rates by 25 basis points to 4.5%, triggering a strong rally in European stocks. Major indices in the UK, Germany, France, Italy, and Spain all jumped around 1.5%, while the Euro Stoxx 50 Index gained 1.62%.

In contrast, the Bank of Japan signaled a more hawkish stance, hinting at an interest rate hike later this year, which led to weaker stock market performance in the Asia-Pacific region—except for China’s A-shares and Hong Kong stocks, which continued to climb!

3. Hong Kong Stocks Are on Fire

Hong Kong’s Hang Seng Index surged nearly 1.4% this morning, but the real excitement came from tech stocks. The Hang Seng Tech Index jumped more than 2.6%, marking an impressive 23% gain over the past 16 trading days.

Investors are rushing to grab Chinese tech stocks. Even Deutsche Bank has acknowledged this trend, stating that it’s becoming hard to buy Chinese stocks at low prices anymore!

4. A-Shares Rally Across the Board

The Chinese A-share market continued its strong upward momentum from yesterday. After opening slightly lower, stocks steadily climbed higher:

Shanghai Composite Index: +1.33%
Shenzhen Component Index: +2.52%
ChiNext Index: +3.63%
STAR Market Composite Index: +2.63%

Out of nearly 5,000 stocks, 4,933 gained, while only 382 declined. A whopping 1,167 stocks surged over 3%, while only 13 stocks fell more than 3%!

5. Investors Rushing In—A Huge Wave of Capital

The most shocking part? In just two hours, trading volume reached ¥1.15 trillion, up ¥203 billion from the same period yesterday. At this pace, today’s turnover could exceed ¥1.8 trillion.

Trading volume is one of the most difficult metrics to fake in the stock market. When big money flows in, it leaves traces that can’t be hidden. A strong and sustained inflow of capital naturally fuels market momentum.

CN20250206-China’s Stock Market Surges: Tech Stocks Still Lead the Way

1. U.S. Stocks Mixed, Chinese Stocks in the U.S. Declined

Last night, major U.S. stock indices saw modest gains of 0.71%, 0.19%, and 0.39%. However, tech stocks showed a mixed performance. Google shares dropped sharply due to higher-than-expected AI investments—Google A fell by 7.29% and Google C by 6.94%. AMD (Advanced Micro Devices) lost 6.27%, while Tesla declined by 3.58%. Meanwhile, U.S.-listed Chinese stocks struggled, falling by 1.97%.

2. Hong Kong Tech Stocks Show Strength

Despite the drop in U.S.-listed Chinese stocks, Hong Kong’s stock market remained resilient. Normally, Hong Kong stocks closely follow the performance of Chinese stocks in the U.S., but today, they moved in the opposite direction. The Hang Seng Index and the Hang Seng China Enterprises Index climbed by over 0.5% by midday, while the Hang Seng Tech Index surged over 1.5%.

3. China’s Stock Market Sees Broad Gains

While China’s stock indices fell yesterday, tech stocks actually performed well. Today, the market fully rebounded, driven by strong tech sector gains. By midday, the Shanghai Composite Index rose 0.76%, the Shenzhen Component Index gained 1.43%, while the ChiNext Index and the STAR Market Composite Index jumped 2.09% and 2.59%, respectively.

4. Market Sentiment is Picking Up

Trading volume continues to surge. Yesterday, the market saw a sharp increase in trading activity, with an additional ¥171.7 billion ($24 billion) in volume. Today, morning trading alone added another ¥79.3 billion ($11 billion), bringing total morning turnover to ¥944.4 billion ($130 billion). This massive increase in liquidity suggests that investors are actively buying the dip, signaling renewed confidence. It also aligns with recent regulatory promises to attract long-term capital into the market before the Lunar New Year.

5. Tech Stocks Lead the Rally

Out of over 5,000 stocks traded, 4,070 saw gains, while only 1,095 declined. Only 55 stocks fell more than 3%, whereas 879 stocks gained over 3%. Tech stocks dominated the top-performing sectors—11 out of 56 industry groups were led by tech, each rising more than 2%. The electrical equipment sector led the way with a 4.56% gain, followed by semiconductors at 3.52%.

With strong capital inflows and government support, the market is preparing for a spring rally. The upcoming 2025 policies are expected to be even more favorable than in 2024. As these policies take effect, investors can look forward to a more optimistic market in the months ahead.

China’s Stock Market Key Indices

China’s stock market comprises several key indices that represent the performance of various segments of its financial markets.

1. Shanghai Stock Exchange

SSE Composite Index (Shanghai Stock Exchange Composite Index): This index reflects the overall performance of all listed stocks (both A and B shares) on the Shanghai Stock Exchange.
SSE 50 Index: Comprising 50 of the largest and most liquid stocks on the Shanghai Stock Exchange, this index represents leading companies in the market.
SSE 180 Index: This index includes 180 representative stocks from the Shanghai Stock Exchange, selected based on sector representation, size, and liquidity.
SSE 380 Index: Focusing on mid-sized companies, this index consists of 380 stocks listed on the Shanghai Stock Exchange.

2. Shenzhen Stock Exchange

SZSE Component Index (Shenzhen Stock Exchange Component Index): Reflecting the performance of 500 stocks listed on the Shenzhen Stock Exchange, this index is a key indicator of the Shenzhen market.
ChiNext Index: This index tracks the performance of the ChiNext Market of the Shenzhen Stock Exchange, which is similar to the NASDAQ and focuses on innovative and fast-growing enterprises.

3. Shanghai & Shenzhen Stock Exchange

CSI 300 Index: A joint venture between the Shanghai and Shenzhen Stock Exchanges, this index includes 300 stocks and serves as a barometer for the performance of China’s A-share market.
CSI 100 Index: This index comprises 100 large-cap stocks from both the Shanghai and Shenzhen Stock Exchanges, representing the top-tier companies in China’s stock market.
CSI 500 Index: Focusing on mid-cap companies, this index includes 500 stocks from the Shanghai and Shenzhen Stock Exchanges.
CSI 1000 Index: This index tracks the performance of 1,000 small-cap stocks from the Shanghai and Shenzhen Stock Exchanges, providing insight into the smaller enterprises in China’s market.

For comprehensive and up-to-date information on these indices, one can visit the official websites of the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

References

Shanghai Stock Exchange http://english.sse.com.cn/markets/indices/overview/
Shenzhen Stock Exchange
https://www.szse.cn/English/siteMarketData/indices/performance/index.html
ChiNext
http://www.cnindex.com.cn/en/module/index-detail.html?act_menu=1&indexCode=399006

CN20250205-Tech Stocks Soar After the Holidays: Is a Tech Bull Market Coming?

The Chinese stock market saw a surge in tech stocks after the holidays, with the STAR 50 Index (China SSE Science and Technology Innovation Board 50 Index) jumping 3.5%! But does this mean a full-fledged tech bull market is on the horizon? Let’s break it down.

1. Hong Kong’s Tech Stocks Lead the Rally (Up 5.06% in a Day!)

The Hong Kong stock market kicked off the post-holiday trading session with a bang, outperforming global markets. By the close, the Hang Seng Index rose 2.83%, and the Hang Seng China Enterprises Index gained 3.51%. But the real star? The Hang Seng Tech Index, which soared 5.06% in just one day!

2. A Tech-Driven Bull Market?

The rally was led by semiconductor giants Hua Hong Semiconductor (+12.66%) and SMIC (+8.47%). What’s fueling this surge?

Breakthrough in China’s 5nm chip technology
China’s tech sector playing catch-up after missing previous global tech rallies

With the global tech race heating up, Chinese tech stocks are finally seeing their long-overdue gains.

3. U.S. Market Impact – Chinese Stocks Shine as the Dollar Weakens

Last night, the U.S. dollar index fell 0.41%, stabilizing U.S. markets after recent losses. But an interesting shift is happening:

China’s AI giant Deep Seek is making waves with its cost-effective and high-performance AI models, shaking investor confidence in U.S. tech stocks.
The “Magnificent Seven” U.S. tech stocks struggled, while Chinese stocks surged 3.33%, outpacing the broader U.S. market.

4. Mixed Performance in the A-Share Market

While global tech stocks soared, China’s A-share market showed mixed trends:

The A50 futures index fell sharply after the opening, dropping 2% intraday due to ongoing trade tensions.
However, tech stocks remained strong, triggering a wave of limit-up gains.
By midday, the Shanghai Composite Index slipped 0.36%, while the Shenzhen Component Index and ChiNext Index edged up 0.44% and 0.50%.
The STAR 50 Index surged 3.50%, driven by tech stocks.

5. Market Sees Heavy Trading Volume

Despite mixed index movements, investor enthusiasm for tech stocks was undeniable.

Trading volume surged to RMB 131.1 billion within just two hours, far exceeding pre-holiday levels.
Total turnover for the two markets reached RMB 865.1 billion.
While a broad market rally seems unlikely, tech stocks are proving to be the main driver of gains in 2025.

CN250127-China’s AI Models Might Shake the U.S.

1. Chinese Stocks Surge Amid U.S. Market Slump

Last Friday, the U.S. dollar index took a dive, dropping 0.64% after a sharp 1.22% fall earlier in the week. The U.S. stock market with all three major indexes declining: the Dow Jones fell 0.32%, the Nasdaq 0.5%, and the S&P 500 0.29%.
In contrast, Chinese stocks listed in the U.S. skyrocketed. The China Stock Index surged by 4.25% in one night, reclaiming all its moving averages. Over the past eight trading days, it has gained 11.8%, signaling a strong rebound in Chinese assets.

2. China’s AI Models Spark Market Panic

Over the weekend, the Chinese AI company Deep Seek, a subsidiary of the quant fund giant High-Flyer Quant (幻方量化), caused a stir in Silicon Valley. The release of its open-source AI model, R1, just a month after unveiling its V3 model, sent shockwaves through the U.S. AI and stock markets.
Independent tests in the U.S. suggest that R1 even surpasses OpenAI’s latest model, o1, raising concerns about China’s rapid progress in AI development.

According to global AI model rankings, Deep Seek’s R1 ranks alongside OpenAI’s o1 as the best in the style-control category, with R1 slightly outperforming in specific benchmarks. Meta’s Chief AI Scientist stated that R1’s debut marks a turning point, showcasing how Chinese companies are not only catching up but surpassing their U.S. counterparts. Open-source models, like R1, are now proving more efficient than proprietary models.

What’s even more striking is the cost efficiency of R1. Deep Seek revealed that training R1 cost only one-thirtieth of what OpenAI’s latest model required—an astounding 98% reduction in expenses. This raises critical questions about the future of high-cost AI infrastructure. For example, NVIDIA, the U.S. leader in AI computing, might face significant setbacks if lower-cost alternatives dominate the industry. Similarly, the U.S.’s $500 billion “Stargate Project” for building AI infrastructure could lose relevance.

The unveiling of R1 caused ripple effects worldwide. SoftBank, a key player in the Stargate Project, saw its stock plummet nearly 6%, its largest single-day drop since November 1. U.S. stocks also took a hit—NVIDIA’s share price fell over 5% in after-hours trading, and Broadcom’s dropped more than 4%. Futures for the Nasdaq index fell over 1.2%, and even Chinese A-shares related to AI dipped after initial gains.

The current shifts might highlight a challenge to US: China has discovered a breakthrough in the AI race, challenging the dominance of U.S. companies. While this may create turbulence in global markets, it’s a long-term positive for Chinese assets. As approach the Lunar New Year, market sentiment remains cautious, but analysts predict a post-holiday rally fueled by both domestic and international investments.

A-shares: The Only Trading Day This Week

With the Lunar New Year holiday, China’s A-shares market will only see trading today.

Besides, the spotlight is on the U.S. Federal Reserve, which will hold its first policy meeting of the year this week. Early Thursday (Beijing time), the Fed will announce its interest rate decision. Markets widely expect a pause in rate cuts for now.

In addition to the Fed, several other central banks, including the European Central Bank, Sweden’s Riksbank, the Bank of Canada, the Central Bank of Brazil, and the South African Reserve Bank, will also reveal their rate decisions in the coming days.

On top of that, U.S. earnings season is heating up. Major tech giants like Apple and Tesla are set to release their quarterly reports this week, drawing significant market attention.

A-shares: The Only Trading Day This Week

Due to the Lunar New Year holiday, today marks the only trading day for A-shares this week. Historically, the market tends to be quiet before the holiday as some investors adopt a cautious approach. However, after the holiday, the market often rebounds as these funds return.

According to Wind data, over the past decade (2015–2024), A-shares have shown a high probability of rising around the Lunar New Year:

5 trading days before the holiday: The market gained in 7 out of 10 years, with the largest increase of 3.92% in 2021.
5 trading days after the holiday: The Shanghai Composite Index rose in 70% of those years, with the biggest jump of 4.85% in 2024.
10 trading days after the holiday: The index continued to rise 70% of the time, with the highest increase of 7.10% in 2019.

Market Outlook and Opportunities

A report by Ping An Securities suggests that, with supportive domestic policies and easing external concerns, the market is expected to maintain an upward trend, with more structural opportunities emerging. Key areas to watch include:

Growth sectors such as advanced manufacturing and industries driven by new productivity.
High-quality companies benefiting from policies to expand domestic demand.
State-owned enterprise (SOE) reforms and opportunities in mergers and acquisitions.
Dividend strategies for long-term value.

Key Events to Watch

As the Lunar New Year holiday approaches, the following events could influence the market in the coming weeks:

China’s January Purchasing Managers’ Index (PMI) data.
Travel and consumer spending during the holiday.
The U.S. Federal Reserve’s interest rate meeting in January.
Updates on U.S. policies under Trump’s administration.

Spring Rally in Sight

A report by Haitong Securities notes that the “spring rally” is likely to unfold gradually. With policies taking effect throughout the year, the market could enter a new phase driven by fundamentals. Structurally, sectors like technology and manufacturing appear promising:

Technology: Supported by favorable policies, technological advancements, and an upturn in the industry cycle.
Mid-to-high-end manufacturing: Strong domestic supply and stable demand from both domestic and international markets suggest continued growth.

Meanwhile, consumer, pharmaceutical, and real estate sectors may experience shifts in expectations:

Real estate fundamentals and property prices are expected to stabilize, thanks to stronger fiscal support.
As household balance sheets improve and fiscal policies provide a boost, the consumer and pharmaceutical sectors could see upward momentum this year.

By monitoring these trends, investors can position themselves for opportunities during and after the holiday season.

CN250124-RMB Surges 300 Points, Major Chinese Stock Indices Rise

1. Global Stock Markets Rally

Global markets are seeing widespread gains. Expectations of potential interest rate cuts by the U.S. Federal Reserve have led to a weakening U.S. dollar, with the dollar index dipping below 108 today. Despite two days of weakness, the three major U.S. stock indices rallied overnight, with large-cap tech stocks driving the S&P 500 to a record high. Chinese stocks listed in the U.S. also stabilized, and the Nasdaq Golden Dragon China Index rose 0.13%. European and Asia-Pacific markets joined the global upswing, marking a positive day for equities worldwide.

2. Chinese Assets Make a Strong Comeback

The renminbi (RMB) surged this morning, rising sharply by 340 points in just over an hour between 9:40 AM and 11:00 AM (Beijing time). Meanwhile, the A50 futures index saw a dramatic turnaround, going from a slight dip (-0.06%) at 9:34 AM to a strong gain of over 1% by midday. Hong Kong’s Hang Seng Index emerged as one of the strongest performers in the Asia-Pacific region, climbing over 1.6% by midday, while the Hang Seng Tech Index surged by more than 3% during trading.

3. A-Share Indices Rise Across the Board

In the A-share market, the Shanghai Composite Index opened slightly lower due to weak sentiment but quickly rebounded. By midday, the Shanghai Composite and Shenzhen Component indices were up 0.73% and 1.13%, respectively. Tech stocks led the rally, with the ChiNext Index and STAR Market Composite Index rising 1.5% and 1.48%. The breadth of the market was impressive, with 3,515 stocks advancing and only 1,636 declining. Out of 56 industry sectors, 49 posted gains, while only 7 saw losses.

4. Timing is Key in Stock Investing

Reflecting on 2024, two significant market rallies stood out. The first began in late January, as I updated my research on January 23 to capture opportunities in specific state-owned enterprise sectors. This rally gained momentum through May. The second rally occurred in September, driven by tech stocks. Following a market bottom on September 18 at 2,700 points, tech stocks led a breakout rally. Both rallies highlight the importance of timing and seizing opportunities.

5. How to View the Current Market?

With only one and a half trading days left before the Lunar New Year, the anticipated “spring rally” is still a compelling opportunity. Key areas to watch include large-cap tech stocks and core assets in the mainboard market. Opportunities like this only came twice last year, and now, another chance is approaching.

Although trading volume this morning was modest, with turnover reaching just ¥737.2 billion, this suggests the rally is not yet driven by significant capital inflows. However, regulatory assurances of pre-holiday fund injections remain in play, and both policy and liquidity factors could support further gains in the coming weeks.

6. A Notable Update from Japan

Just before midday, the Bank of Japan announced a 25-basis-point rate hike, raising interest rates from 0.25% to 0.5%. This move could impact global capital flows, as it affects low-interest-rate arbitrage opportunities in Japan. Some of this capital might find its way into Chinese markets. Let’s wait and see how this unfolds.