FX.co ★ China Stocks Climb on AI Optimism

The Shanghai Composite Index rose 1.1% to 3,843 on Friday, while the Shenzhen Component Index jumped nearly 4% to 13,810, driven by a strong rebound in semiconductor and AI-related stocks. The advance was underpinned by renewed optimism over AI spending after major US technology companies reaffirmed their aggressive investment plans, with sentiment further boosted by Microsoft’s solid earnings and strong Azure cloud growth.

Notable gainers included Cambricon Technologies (up 10.2%), SMIC (8.1%), Zhongji Innolight (13.7%), and Eoptolink Technology (14.4%).

On the macro front, China’s manufacturing PMI slipped into contraction in July for the first time since February, while the non-manufacturing PMI also fell unexpectedly. The weaker data deepened concerns about a loss of momentum in the economy after second-quarter GDP growth came in below the government’s 4.5%–5% target range. The Politburo pledged timely and effective policy support but offered few specifics on additional stimulus.

Despite Friday’s rally, both indices were still on track to end the month with losses.