The Chinese stock market, which had declined the previous day, saw a slight increase today. Analysts suggest that investors are adopting a wait-and-see approach ahead of corporate earnings announcements. The Shanghai Composite Index closed up 0.01% at 3,927.18, the Shenzhen Component Index rose 0.45% to 14,354.31, and the ChiNext Index gained 1.12% to finish at 3,626.30.
Reports indicated that the valuation of Chinese technology stocks has risen significantly compared to their U.S. counterparts, contributing to a weak morning session. The Financial Times noted that the Shanghai STAR50 Index has surged 29% this year, with a price-to-earnings ratio exceeding 150, compared to 35 for the Nasdaq 100, highlighting a substantial disparity.
Additionally, the upcoming listing of Unitree on the Shanghai Stock Exchange has generated considerable excitement, with individual investors reportedly oversubscribing by more than 8,000 times. This influx of capital into the IPO market is seen as a potential negative for overall market liquidity.
Despite the morning's weakness, the Chinese stock market rebounded in the afternoon as bargain-hunting activity increased. Major tech companies are releasing their second-quarter earnings, which are still showing solid results, positively influencing market sentiment.
China's major financial institution, Zhongjin Securities, stated, "We maintain our view that the Chinese stock market will experience a gradual upward trend. The index is expected to resume its upward trajectory after a period of adjustment, although the pace of growth may be slower than in the past." They added, "The index will not rely solely on storytelling but will change based on clear validation and performance."
Notably, stocks related to optical modules saw significant gains today. Jianqiao Technology hit its upper limit, while Changyingtong recorded a substantial increase. Wanlian Securities commented, "The domestic and international optical internet industries are thriving, with an increase in demand for 800G optical modules and the large-scale commercialization of 1.6T optical modules. Key Chinese companies are expected to benefit significantly due to their strengths in technology, production capacity, and large-scale delivery experience."
The pharmaceutical and biotech sectors also continued their upward trend, with Shenqi Pharmaceutical and Boji Pharmaceutical reaching their upper limits. Shanghai Securities reported that while the pharmaceutical and biotech sectors are experiencing favorable developments due to changes in policy environment, global expansion successes, and performance improvements, the sector's valuation has remained at historically low levels for an extended period. Furthermore, the enhancement of capabilities through AI is expected to drive a reevaluation of the value of innovative drug sectors.
Meanwhile, the People's Bank of China set the yuan's daily reference rate against the dollar at 6.7878, a decrease of 0.0010 yuan from the previous day, reflecting a 0.01% increase in the value of the yuan.
* This article has been translated by AI.
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