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China stocks gain on surge in tech indices; Shanghai Composite closes 0.5% higher

SHANGHAI: China stocks ended higher on Wednesday, with major tech indices booking their biggest quarterly gains in a year on policy support from Beijing and strong earnings expectations.

The blue-chip CSI300 index rose 0.7 per cent to 5,224.04, while the Shanghai Composite Index firmed 0.5 per cent to 3,591.20, also aided by soft factory activity data that soothed fears of policy tightening.

Shenzhen’s start-up board ChiNext climbed 2.1 per cent to a six-year high, while Shanghai’s tech-focused STAR50 index rose 1.7 per cent.

For the quarter, the CSI300 gained 3.5 per cent and the SSEC climbed 4.3 per cent.

ChiNext jumped 26 per cent for the quarter, while STAR50 advanced 27 per cent, both posting their best quarterly gains in a year.

Shares in China’s semiconductor firms jumped on expectations of robust earnings growth in the first half as a shortage of semiconductors pushed prices higher.

Shenzhen Fine Made Electronics Group Co Ltd, Kingsemi Co Ltd, Sino Wealth Electronic Ltd and SG Micro Corp rose between 11 per cent and 20 per cent.

The CSI all-share semiconductors & semiconductor equipment index climbed 4.8 per cent.

Analysts attributed the tech strength to Beijing’s policy support amid Sino-U.S. tech competition and rosy earnings growth in the first half.

Semiconductors, as a new type of strategic resource, are pivotal to China’s economic development in coming decades, BOC International (China) said in a report, noting price hikes in the semiconductor sector.

Growth in China’s June factory activity dipped to a four-month low on higher raw material costs, a shortage of semiconductors and a COVID-19 outbreak in the major export province of Guangdong, amid wider supply chain disruptions in Asia.

China’s economic growth could be weak in the second half, indicating a neutral monetary policy with a loosening bias would continue, Essence Securities said in a report, adding weak growth could substantially decrease chances of monetary tightening.

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