The Chinese stock market, which had seen slight gains the previous day, closed lower on August 19. Analysts attribute the decline to the impact of a significant drop in U.S. tech stocks. The Shanghai Composite Index fell 2.40% to close at 3,894.42, the Shenzhen Component Index dropped 5.01% to 13,890.15, and the ChiNext Index decreased by 6.26% to 3,473.49.
On the previous night, the Philadelphia Semiconductor Index plummeted by 5%, and major tech stocks in the U.S. also experienced substantial declines. The high valuations of AI-related stocks drew attention, leading to a sell-off in Chinese tech shares. In China, semiconductor, memory, and optical communication stocks related to AI hardware saw significant losses. Analysts suggest that rather than a collapse of the growth narrative in the AI sector, the market is undergoing a necessary valuation reassessment of stocks that had risen too quickly.
Rising U.S. Treasury yields also negatively affected tech stocks. The yield on 30-year U.S. Treasuries reached 5.34%, the highest level in 20 years. Similarly, Japan's 10-year bond yield approached 3%. Higher bond yields reduce the present value of future earnings, posing challenges for tech stocks.
One of the day's highlights in the Chinese market was the debut of Unitree (宇樹科技), which saw its opening price surge by 629.4% to 1,100 yuan compared to its initial public offering price. However, as selling pressure emerged, the stock closed at 845.0 yuan, reflecting a 460.3% increase.
CITIC Securities noted in a report that the narrative surrounding the new AI industry has yet to gain substantial support, with many application scenarios still in conceptual stages and significant time needed for commercialization. They added that it will be challenging to lead a revaluation of the entire sector in the short term, urging the market to patiently await the realization of new industrial narratives.
In contrast, the coal sector showed strength, with stocks like Baotailong (寶泰隆) and Shanxi Heimao (陜西黑貓) hitting their daily price limits. This surge was bolstered by announcements from major coking companies in China that they would raise prices starting August 20. As coal prices rise, so do the prices of coking products. Additionally, China's coal production last month hit its lowest level since October 2021, down 10.1% year-on-year, leading to expectations of further price increases due to reduced supply.
Banking stocks also saw gains, with shares of CITIC Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China rising significantly. Nanjing Bank reported an 8% increase in net profit the previous day, indicating improved overall performance in the banking sector due to expanded lending and effective debt management.
Meanwhile, the People's Bank of China set the yuan's central parity rate against the dollar at 6.7854 yuan, a decrease of 0.0051 yuan from the previous day, reflecting a 0.07% increase in the value of the yuan.
* This article has been translated by AI.
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