Shanghai Composite edges up while ChiNext surges 3.41%; AI hardware explodes as Zhongji Innolight’s market cap returns to 1 trillion yuan
On September 7, China’s A-share market staged a rare and extreme divergence: the Shanghai Composite Index barely moved, edging up 0.07% to close at 3,932.70 points, weighed down by heavy selling in financial heavyweight stocks. Tech stocks, meanwhile, exploded across the board, driving the ChiNext Index up 3.41% to close at 3,398.68 points, while the Shenzhen Component Index rose 1.91% to 13,774.91 points. Combined turnover across the Shanghai, Shenzhen, and Beijing exchanges reached 1.96 trillion yuan, down approximately 86.8 billion yuan (approximately $12.9 billion) from the previous session.
On the board, stocks rose broadly across both exchanges, but the wide gap between the indices reflected violent rotation of capital among sectors. Financial stocks were the day’s biggest losers. The news that China’s Ministry of Finance, together with China National Tobacco Corporation, had completed a 360 billion yuan (approximately $53.6 billion) capital injection into several major financial institutions landed over the weekend. By any measure, this was a substantive positive for the banking and insurance sectors. However, banking sector indices had already been repeatedly hitting new phase highs in the prior period, and once the catalyst materialized, it triggered a classic “sell-the-news” wave. The sector gapped higher at the open before quickly diving, directly dragging the Shanghai Composite into a bearish candlestick that opened high and closed lower.
In stark contrast to the financial sector’s weakness, the tech complex powered ahead all day. The communications equipment sector closed up 3.64%, semiconductors rose 2.56%, and the CPO (co-packaged optics) theme saw a wave of limit-up moves. Sector heavyweight Zhongji Innolight (300308.SZ) soared 10.38% on its A-shares, pushing its market capitalization back above the 1 trillion yuan threshold. Eoptolink Technology (300502.SZ) gained 8.08%, and Suzhou TFC Optical Communication (300394.SZ) rose 7.36%. In Hong Kong, Zhongji Innolight’s H-shares surged nearly 20%.
The spark that ignited the tech rally came from across the Pacific. OpenAI released its latest large language model, GPT-6 Astra, over the weekend, which industry observers have called the most powerful model in human history. Astra achieved breakthrough progress in computer use and 3D modeling, dramatically raising market expectations for computing power demand once again. Although U.S. August non-farm payroll data came in far above expectations, briefly stoking rate-hike concerns, the AI hardware complex overcame valuation pressure on the strength of its earnings momentum. Last Friday, U.S. memory and optical module names rallied against the tape, with the Philadelphia Semiconductor Index gaining more than 3%.
The rally quickly transmitted to Asia-Pacific markets. Japanese and South Korean stocks opened higher and extended gains on Monday, injecting additional bullish momentum into China’s A-share tech sector.
Goldman Sachs added fuel to the fire at a critical moment. The bank initiated coverage on Zhongji Innolight’s H-shares on September 7 with a Buy rating and a 12-month target price of HK$3,267 (approximately $420). Based on the H-share’s current price of approximately HK$1,203 (approximately $150), this implies nearly threefold potential upside. Goldman also raised its global optical module shipment forecasts across the board: total shipments for 2026–2028 were revised up by 21%, 31%, and 31% respectively, with shipments of 800G-and-above products raised by 31%, 39%, and 36%. The bank now expects the global optical module market to reach $68 billion, $131.4 billion, and $148.5 billion in 2026, 2027, and 2028 respectively.
Goldman’s earnings forecasts for Zhongji Innolight are equally aggressive, with its 2026 and 2027 net profit estimates running 25% and 42% above market consensus respectively, based on assumptions of higher revenue and gross margins.
Nvidia CEO Jensen Huang also weighed in on Sunday local time, stating that the GPT-6 Astra model was trained on a cluster of more than 100,000 Grace Blackwell NVLink72 units. He declared on social media that “AGI has arrived” and hinted that the next batch of 400,000 GPUs is about to come online, suggesting the computing power arms race is still accelerating.
On the domestic policy front in China, positive news also emerged. The Ministry of Industry and Information Technology issued the “15th Five-Year Plan for the Information and Communications Industry” after the close, proposing that by 2030, the industry’s revenue will reach 4.1 trillion yuan, cumulative investment in information infrastructure will total 3.8 trillion yuan, and intelligent computing capacity will reach 9,800 EFLOPS. The 27th China International Optoelectronic Exposition will open in Shenzhen on September 9, with a concurrent forum on “CPO and Optoelectronic Heterogeneous Integration Technology in the AI Computing Era.”
Capital flows confirmed the market’s preference. Main-force funds poured into the tech complex: the communications equipment sector saw net inflows of 20.1 billion yuan (approximately $3.0 billion), the electronic components sector attracted 15.7 billion yuan (approximately $2.3 billion), semiconductors drew 9 billion yuan (approximately $1.3 billion), and consumer electronics took in 2.7 billion yuan (approximately $402.4 million). The PCB sector also performed impressively, with Chinese substrate makers Shennan Circuits (002916.SZ), WUS Printed Circuit (002463.SZ), and Xingsen Technology (002436.SZ) among multiple names hitting limit-up.
However, not all tech stocks shared in the celebration. The domestic GPU segment in China presented a starkly different picture. Moore Threads, facing lock-up expiration pressure, hit the 20% daily limit down, while MetaX fell 9.67%, and Hong Kong-listed Biren Technology dropped about 1.1%. Among the market’s so-called “Four Little Dragons” of Chinese domestic GPUs, Enflame Technology is about to list, and the overall segment faces valuation normalization pressure, which made capital notably more cautious toward the semiconductor sector during the rebound. On the board, the semiconductor and communications equipment sectors were essentially flat in the final hour of trading, reflecting institutional investors returning to the sidelines after the bounce.
The memory sector also showed clear divergence. A-share ChangXin Memory Technologies rose 6.7%, but the memory “Three Little Dragons” — Demingli (001309.SZ), Longsys (301308.SZ), and Biwin Storage (688525.SH) — gained only about 3.5%, a stark contrast to the strong performance of the optical module leaders and an even wider gap versus the gains in U.S. memory stocks.
From a technical perspective, the Shanghai Composite Index has now posted four consecutive bearish candles, and the chart pattern has weakened. While it has not yet broken down decisively, the short-term trend is not encouraging. The Shenzhen Component Index and ChiNext Index, by contrast, had previously faced breakdown risk, and Monday’s solid bullish candle effectively relieved the pressure of further downside.
The key variable for the market going forward is the sustainability of the tech rebound. Some market analysts noted that if tech stocks cannot maintain their strength, this rally is merely a pulse-driven bounce riding on external catalysts, and the market will likely revert to a structural valuation-repair pattern. This week, the U.S. will also release CPI data, followed by a Federal Reserve policy meeting, and then China’s National Day holiday — some capital will likely remain cautious until these uncertainties are resolved.
