On December 22, China's major stock indices surged with increased trading volume. The Shanghai Composite Index rose 0.69% to reclaim the 3,900-point level, while the Shenzhen Component Index gained 1.47% and the ChiNext Index jumped 2.23%. Total turnover across the two exchanges reached approximately 1.9 trillion yuan, up over 130 billion yuan from the previous session, with more than 2,900 stocks advancing.
The market showed broad-based strength, driven by three main themes: 1) Policy tailwinds boosted the Hainan Free Trade Port sector and auto industry chain. 2) Tech stocks rebounded across the board as overseas pessimism around AI narratives eased. 3) The non-ferrous metals sector rallied, with spot gold and silver hitting record highs.
Key factors behind the rally include: 1) Reduced external uncertainties as major events like the "super central bank week" and Bank of Japan rate hikes have passed, stabilizing global risk appetite. 2) Improved sentiment toward overseas tech stocks and domestic tech sector catalysts, including Micron's better-than-expected earnings and breakthroughs in optical computing chips. 3) Increased capital inflows via broad-based ETFs as year-end approaches.
Notable sector performances: - Hainan-related stocks extended gains, with Hainan Strait Shipping and Hainan Development among over 20 limit-up stocks. - Computing hardware concepts like optical modules and high-speed copper connections strengthened, with Yangtze Optical Fibre hitting limit-up. - Semiconductor stocks remained active, with Kema Technology and Shanghai Xinyang posting significant gains. - Precious metals shone as Silvercorp Metals touched limit-up. - Robotics stocks rallied in the afternoon session, including Beijing Capital Development and Wolong Electric.
On the downside, cinema stocks like Bona Film Group fell to limit-down, while consumer stocks diverged and AI healthcare concepts retreated.
Outlook: CITIC Securities expects A-shares to move in sync with global markets as U.S. AI stocks stabilize and BOJ rate hike impacts prove limited. They recommend three investment themes: dividend plays (Hong Kong high-yield stocks, financials), growth sectors (non-ferrous metals, AI, new energy), and thematic opportunities (Hainan duty-free, nuclear power, winter tourism).
CMSC anticipates the traditional year-end/spring rally is beginning, driven by accelerated policy implementation and institutional buying of broad-based ETFs, favoring blue-chip indices like the CSI 300.
SDIC Securities cautions that the liquidity-driven bull market may be peaking above 4,000 points, with the market likely to remain range-bound until fundamental improvements emerge. They highlight export-oriented and cyclical sectors for H1 2026.
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