Chinese stocks have rallied from midweek lows and will look to position for year-end gains.
CHINA 50 – Daily Chart
The CHINA 50 index has found buyers after a dip this week, and a strong end to the week could set up further gains into the year-end.
Technology stocks have been hit by negative sentiment over valuations, and China’s economy has also been a recent drag on prices after a strong year. After playing catch up this year, investors are seeing Chinese shares as a better alternative to their U.S. peers.
Although AI developments have boosted demand for Mainland China and Hong Kong listed stocks, economic data have exposed downside risks. Beijing has recently offered stimulus measures to support the economy, which can underpin prices.
Despite economic headwinds, Chinese researchers have announced developments in AI, potentially giving Beijing an edge in future trade talks with the U.S.
“Chinese researchers completed a working extreme ultraviolet lithography prototype in early 2025, according to sources. The machine is still undergoing testing and has not yet produced functional chips. Government targets call for producing working chips by 2028,” sources said.
At present, ASML manufactures EUV machines, and export controls have blocked China from buying them. China’s entry into the EUV lithography space could have ramifications for existing chip manufacturers. China could eventually sell machines at a fraction of current market prices, impacting earnings for companies such as ASML and NVIDIA.
A strong close this week could lead to a rebound in key Chinese shares into the year-end.
