Shanghai stocks flirted with fresh 10-year highs, while Hong Kong shares climbed on Monday, supported by Alibaba after the e-commerce giant reported strong AI-driven growth, fuelling investor confidence in Chinese innovation.
** Sentiment on the mainland was also aided by regulators’ pledge to consolidate the “good trend” of the stock market, which jumped 10% in August in its best month in almost a year.
** The Shanghai Composite Index 000001 closed 0.5% higher while the blue-chip CSI300 Index 3399300 gained 0.6%.
** Hong Kong’s benchmark Hang Seng Index 
HSI jumped 2.2%.
** The gains were driven by a 19% surge in index heavyweight Alibaba 
BABA, after the tech company said artificial intelligence was key to the growth of its cloud computing business.
** China Europe Capital Chairman Abraham Zhang said that Alibaba’s progress in AI, including its breakthrough in AI chips, “will have far-reaching implications to China’s entire AI value chain,” and represents a “watershed moment” for the industry.
** Market gains were also supported by growing expectations of a U.S. interest rate cut later this month.
** China’s CSI AI Index 9930713 rose 2.7% to a record high on Monday, while Shanghai’s STAR Semiconductor Index (.CSI950125) jumped 3%.
** Bets on homegrown chipmakers were also strengthened by news that the U.S. is making it more difficult for chipmakers Samsung 
005930 and SK Hynix 
000660 to produce chips in China by imposing curbs on exports of U.S. equipment.
** Biotech shares (.CSI931440) also jumped on growing optimism about Chinese innovation.
** Banking shares (.CSI399986) softened, after China’s major state-owned banks warned that net interest margins will face increased pressure for the rest of the year.
** Despite concerns the Chinese economy could come under greater pressure in the second half of the year, analysts said “China’s bull run has legs,” as valuations remain modest while there are few signs of retail euphoria.
** China’s securities regulator said on Friday that it would continue to consolidate the upward trend and make the market more appealing to long-term investors.
