China stocks surge at their highest levels in over 10 years

China stocks closed at their highest levels in more than 10 years on Thursday, buoyed by strong gains in semiconductor, gold, and AI-related shares as investors returned from the Golden Week holiday and played catch-up with global markets.

China’s blue-chip CSI300 Index ended 1.5 per cent higher, while the Shanghai Composite Index gained 1.3 per cent to 3,933 points, above the 3,900 mark for the first time since August 2015. Hong Kong benchmark Hang Seng edged down.

Shares of Chinese gold miners jumped, tracking a surge in bullion prices that hit a record high above $4,000 per ounce on Wednesday.

Onshore non-ferrous metal shares surged 8.2%.

The tech-focused STAR50 index gained nearly 3% amid renewed enthusiasm for artificial intelligence.

China’s chipmakers rose as US lawmakers pushed for broader bans on chipmaking equipment sales to China. The CSI All Shares Semiconductor Index was up 2.7%.

Despite a reported 11.5% year-on-year increase in holiday trips, average spending slightly dropped. Tourism shares fell 1.8%.

UBS analysts said in a note that the underlying weakness of holiday spending was evident in declining movie box office revenues and liquor shipments.

Shares of Hang Seng Bank soared as much as 41.2% to HK$168, their highest level since February 2022, after key shareholder HSBC proposed to take the bank private. HSBC shares listed in Hong Kong fell 6%.

The CSI Rare Earth Index jumped nearly 7%, after China tightened its rare earth export controls on Thursday, expanding restrictions on processing technology and unauthorised overseas cooperation.

Meanwhile, investors are awaiting signals from the Communist Party’s leadership meeting on October 20-23, and a possible Xi-Trump meeting at the APEC summit later this month.

Meanwhile Chinese holidaymakers’ average spending dipped to a three-year-low over this year’s eight-day Golden Week holiday, dashing hopes that a domestic stock market rally would encourage cautious consumers to open their wallets.

Weak consumption has weighed on the world’s second-largest economy this year as policymakers navigate pressure on multiple fronts ranging from US President Donald Trump’s trade policies to extreme weather, excessive competition in the domestic market, and chronic weakness in the property sector.

In China, the Mid-Autumn festival is an important festival for family gatherings and this year it coincided with the National Day holiday, resulting in a longer-than-normal break between October 1 and 8.

Average spending per trip during the holiday this year reached 911.04 yuan ($113.52), down 0.55% from the same period last year, according to Reuters calculations based on government data published on Thursday.

That was the lowest since 2022, when spending fell to 680.6 yuan during the COVID-19 pandemic lockdowns.

A total of 888 million trips were made during the holiday, according to the Culture and Tourism Ministry, compared with 765 million trips over a seven-day break the year before.

Domestic tourism revenue for the holiday period totalled 809 billion yuan, the ministry said, up about 15% from last year.

Citi analysts said in a note published on Wednesday that overall holiday activities were largely back to normal as long-haul travel recovered.

“New growth momentum, however, was muted. And we see little evidence on the ‘wealth effect’ from the equity rally,” they said. A recent surge in Chinese stocks to decade-high levels had raised hopes of increased consumer spending, but Nomura analysts said earlier this week that the impact of the rally on consumption was likely to be limited for the remainder of the year. Weak demand has persisted as policymakers contend with pressures ranging from the property sector downturn to concerns over job security.

The Chinese box office, which traditionally has been a big winner of such holidays, saw a big decline during the week due to a lack of big blockbusters being released.

The national box office recorded 1.835 billion yuan in earnings, down 12.8% from last year’s seven-day holiday earnings of 2.105 billion yuan.

This year’s earnings also fell by nearly one-third compared with the 2.735 billion yuan generated during the eight-day National Day break in 2023, according to data from the online movie ticketing platform Maoyan.

“I didn’t watch any films this holiday while usually I watch at least one,” said Liu Tao, a Beijing resident in the financial sector. “I drove to Yangzhou with my wife and son. We didn’t have the time. Besides, there is nothing exciting in the cinema, I’d rather watch short videos on my phone, which is free.”

Reuters