According to Reuters, the benchmark CSI300 Index rose 1.6% by the midday break, while the Shanghai Composite Index advanced 1.2%. In Hong Kong, the Hang Seng Index climbed 2%, extending the broader market recovery.
The gains came after both the CSI300 and Shanghai Composite had tumbled more than 5% last week, weighed down by a global sell-off in chip stocks and renewed geopolitical tensions in the Middle East that dampened investor sentiment.
State support lifts market confidence
Investor confidence improved after reports that China’s securities regulator would meet market participants on Monday to discuss measures aimed at maintaining market stability.
Further boosting sentiment, two state-owned investment firms announced over the weekend that they had collectively deployed around 60 billion yuan ($8.86 billion) to purchase Chinese equities, reinforcing expectations that Beijing is prepared to support domestic financial markets following the recent sharp correction.
Traditional sectors lead recovery
The market rebound was led by sectors that have significantly underperformed technology stocks this year. Consumer, property and utility shares attracted buying interest as investors rotated into companies viewed as offering more stable earnings and cash flows.
The shift reflected a broader move away from high-growth technology names that had driven much of the market’s gains earlier this year.
Technology and chip stocks continue to slide
Despite the broader market recovery, technology shares remained under pressure.
The STAR Composite Index, which tracks many of China’s technology companies, erased its early gains and was down 1% by the midday session.
An index tracking semiconductor materials and equipment companies fell another 3%, putting it on course for a seventh consecutive day of losses as investors continued to reduce exposure to AI- and chip-related stocks.
Reuters reported that market participants remain cautious about richly valued technology shares following the recent global correction in semiconductor stocks.
IPO demand signals greater investor caution
Investor appetite for China’s technology sector also appeared to be moderating. Reuters reported that institutional demand for chipmaker CXMT Corp’s $8.6 billion initial public offering, while still strong, was considerably less exuberant than demand seen for earlier Chinese technology IPOs this year.
The softer response has been viewed as another indication that investors are becoming more selective towards high-valuation semiconductor and AI companies.
Hong Kong market broadens gains
In Hong Kong, gains were broad-based, with biotech, energy and consumer stocks leading the advance as investors sought opportunities outside the technology sector, Reuters reported.
The performance highlighted a continued rotation towards more defensive and value-oriented sectors as markets attempted to recover from last week’s sharp sell-off.
