Chinese stock markets staged a strong rally today, with the Shanghai Composite Index decisively breaking through the 4200-point level. The ChiNext Index surged over 3%, with both indices hitting their highest levels since 2015. The STAR 50 Index briefly soared more than 5% to a record high. The semiconductor sector led the charge with a wave of limit-up gains, while brokerage stocks, often seen as a bellwether for bull markets, saw a notable uptick in the afternoon session.
Total market turnover reached 3.5 trillion yuan, an increase of nearly 500 billion yuan from the previous session. Gainers outnumbered decliners across the two exchanges.
The AI industrial chain, including memory chips, computing power chips, and optical modules, experienced a significant breakout.
In other sectors, major financials like brokerages moved higher in the afternoon. Jinlong Co., Ltd. rose by the limit, followed by gains in stocks like Changjiang Securities. The liquid cooling server concept also gained traction during the session, with Binglun Environment, Dayuan Pump Industry, Invt, Bojie Shares, and Seagull Shares all hitting the limit-up. The PCB concept remained active, with Han's Laser and Guanghe Technology also reaching the upper limit.
On the downside, the port and shipping sector saw collective adjustments, with stocks like Guohang Ocean, China Merchants Energy Shipping, and China Merchants Nanjing Oil experiencing declines.
Looking ahead, foreign institutions maintain a positive outlook on Chinese capital markets. Goldman Sachs believes A-shares will generate excess returns for investors in areas such as artificial intelligence and the upcoming 15th Five-Year Plan. While short-term stock prices may fluctuate, long-term investment in R&D is expected to yield high-quality output. The technology narrative is reshaping the foundation of the capital market, and the next five years are likely to see more hard-tech companies taking center stage on the A-share market.
Regarding individual stock performance, 3,121 stocks advanced, 2,239 declined, and 155 were unchanged across the two exchanges. A total of 134 stocks hit the daily limit-up, while 30 fell by the limit-down.
At the close, the Shanghai Composite Index rose 1.08% to 4225.02 points, with a turnover of 1584.4 billion yuan. The Shenzhen Component Index gained 2.16% to 15899.30 points, with a turnover of 1954.5 billion yuan. The ChiNext Index increased by 3.50% to 3928.97 points.
**Capital Flows**
Today, major capital inflows were focused on sectors such as semiconductors, electronic components, and photovoltaic equipment. Top stocks by net main fund inflow included Shanghai Electric,
**Key News Recap** 1. **China Association of Automobile Manufacturers (CAAM):** In April, China's new energy vehicle (NEV) exports reached 430,000 units, a year-on-year increase of 110%. Data released today (11th) shows stable growth in NEV production, sales, and exports for April. NEV production and sales were 1.32 million and 1.344 million units respectively, up 5.5% and 9.7% year-on-year. NEV sales accounted for 53.2% of total new car sales. From January to April this year, China's NEV exports totaled 1.384 million units, a year-on-year increase of 120%.
2. **New Flexible Monocrystalline Silicon Batteries to Boost Commercial Aerospace and Space Photovoltaics:** The Tianzhou-10 cargo spacecraft will carry flexible encapsulated monocrystalline silicon solar cell samples into space for in-orbit environmental experiments. This project will provide technical support for China's commercial space internet constellation networking, space computing power, and the future development of space photovoltaics. The flexible monocrystalline silicon solar cells, developed independently by a Chinese research team over three years, will be placed on the external exposure experiment platform of the China Space Station's material module to test their performance under extreme space conditions, including particle radiation, ultraviolet radiation, and atomic oxygen erosion. Compared to the mainstream gallium arsenide cells used in aerospace, these flexible silicon cells are thin, lightweight, rollable, and cost about one-tenth as much, with a weight of less than one kilogram per square meter, significantly reducing launch costs.
3. **National Bureau of Statistics (NBS):** In April, China's Consumer Price Index (CPI) rose by 1.2% year-on-year and 0.3% month-on-month. Data released on the 11th shows urban prices increased by 1.2%, while rural prices rose by 1.0%. Food prices fell by 1.6%, while non-food prices increased by 1.8%. Prices of consumer goods rose by 1.4%, and service prices increased by 0.9%. The average CPI from January to April rose by 0.9% compared to the same period last year.
**Market Outlook Analysis** 1. **China Galaxy Securities:** The market may face a pattern of consolidation and increased differentiation in the short term. While the US-Iran conflict remains a recurring disturbance, market sensitivity to such external events has weakened, with marginal impacts diminishing. Future external focuses include the potential visit of former US President Trump to China and the change in Federal Reserve leadership. Domestically, structural highlights are prominent amid economic recovery, providing earnings support for the upward trend. As the Shanghai Composite Index approaches 4200 points, the short-term market may experience consolidation and greater divergence. The overall upward trend remains intact, with sector rotation and structural opportunities likely to dominate. The focus should remain on thematic opportunities and structural allocation directions.
2. **CITIC Securities:** Against the backdrop of a strengthening structural market trend, actively reducing portfolio volatility may be a better choice. The momentum in technology stocks across China, the US, Japan, and South Korea continues to strengthen. However, even the strongest industry trends can experience sharp volatility if short-term gains become too steep. The latest Momentum Strength Index (MSI) reading for the ChiNext Index is 64.4, which remains within a historically reasonable range. Notably, before the pullback on May 8th, the reading on May 7th was 71.9, very close to the critical value of 75 for the strong acceleration zone. Even with a strong AI industry trend, abnormal momentum intensity and a steep short-term rise could imply increased subsequent volatility. In this context, for existing funds, proactively lowering portfolio volatility might be the preferable strategy.
3. **East Money Securities:** The AI industry trend is the primary driver; market sentiment and capital flows are derivatives of this trend. In the three trading days following the May Day holiday, the communications and electronics sectors led the market, confirming that the diffusion of AI prosperity has become the core theme chosen by the market after the "April Decision." The priority of indicators for observing the main theme is: US AI capital expenditure > China's computing hardware import substitution > commercialization of Chinese AI applications. This is because the AI industry trend is fundamental, while market sentiment and capital games are derivatives. Only when AI Capex maintains high growth can the sustainability of the main theme be secured by capital; other segments like import substitution and application catch-up are extensions and diffusions of the main theme. The collective upward revision of 2026 Capex guidance and the expectation of high growth in 2027 by the four major North American cloud providers have alleviated market concerns about "peak AI capital expenditure." Signals such as increased token usage, in-house chip development by major firms, continued commercialization, and year-on-year improvement in Return on Invested Capital (ROIC) further reinforce the sustainability of this prosperity cycle.
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