Chinese Stocks Stage Sudden Rally as Tech Enthusiasm Roars Back
(Bloomberg) — Chinese stocks rose sharply on Wednesday as enthusiasm around the nation’s technology shares returned, fueled by large gains in recent initial public offerings.
The onshore benchmark CSI 300 Index jumped 1.8%, capping its best day in more than three months. Chinese hardware makers including Suzhou TFC Optical Communication Co. and Eoptolink Technology Inc. were among the top gainers. The tech‑focused ChiNext Index climbed more than 3%, and a gauge of major Chinese companies trading in Hong Kong rose 1% at the close.
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Investor confidence was boosted by MetaX Integrated Circuits Shanghai Co.’s blockbuster debut Wednesday. The GPU maker’s shares soared almost 700% at the close, reviving interest in China’s artificial intelligence-related stocks. It was the second big debut this month, after the so-called Nvidia challenger Moore Threads Technology Co. jumped 425% on its first trading day.
“Chinese investors gained confidence with the help of technology IPOs at year-end, which made it easier for funds to drive the stock index higher,” said Shen Meng, director at Beijing-based investment bank Chanson & Co.
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The afternoon spike also coincided with a jump in brokerages such as Huatai Securities Co., whose shares surged by the daily limit of 10% at one point. Turnover in eight exchange-traded funds — widely used by the so-called national team of state-linked investors — reached 19.2 billion yuan on Wednesday. That compares with 14.4 billion yuan on average over the past two months.
Turnover in the top seven ETFs tied to the A500 Index hit a record 48.9 billion yuan.
“There is some speculation of the national team buying ETFs, which is supporting market sentiment,” said Steven Leung, an executive director at Uob Kay Hian Hong Kong. “But overall there should be limited downside from here after the recent pullback.”
Still, whether Wednesday’s rally can extend depends on the outlook for China’s economic recovery. Investor mood soured this week after fresh signs of weak growth, adding to earlier concerns about lofty tech valuations. The MSCI China Index has fallen into a technical correction, and the Hang Seng Tech Index is set to become the first key Chinese stock gauge to slip into a bear market.
