China’s CSI 300 tech index hits highest level since 2015

Retail investors in China are flooding the stock market like it’s a clearance sale, and the CSI 300 Information Technology Index just hit its highest point since 2015.

The broader CSI 300 has now jumped about 16% since January, putting it near a level it hasn’t touched in over three years. The rally’s being driven by AI hype, a nationwide push to build its own chip supply, and Beijing’s attempt to stop companies from slashing prices into the ground.

While bulls are celebrating fresh liquidity support and policy incentives, analysts are already flashing warnings. Raymond Cheng, who oversees North Asia as CIO at Standard Chartered, said this whole rally feels off.

“China’s ongoing equity rally appears disconnected with the economic fundamentals,” Raymond said. He thinks retail investors are the ones doing the heavy lifting — moving their money out of banks and into stocks.

They’re not doing this quietly either. Retail investors now make up 90% of trading volume across China’s onshore stock exchanges. 

That’s insane compared to the New York Stock Exchange, where retail action only covers about 20–25%. It’s not institutions calling the shots in China, it’s people sitting at home with trading apps and free time.

Retail momentum piles into risky bets

Right now, China’s households are sitting on 160 trillion yuan in savings, roughly $22 trillion. But barely 5% of that is in the stock market. Analysts told CNBC there’s a huge gap for more retail cash to flood in, especially as deposit interest keeps shrinking and property investing stays dead. That cash is looking for action, and equities are where it’s going.

Still, not everyone is relaxed about it. Hao Hong, managing partner and CIO at Lotus Asset Management, said the whole thing doesn’t make sense when you look at the numbers.

“Fundamentals do not well support the momentum, but markets always lead fundamentals,” Hao said. He doesn’t think it’s a full-blown bubble yet, but warns that it’s close, especially in corners like tech and contract research firms, which work with pharma, biotech, and medical device companies. Those areas are running too hot for his taste.

Meanwhile, Goldman Sachs said this rally has added more than $3 trillion in market cap between China and Hong Kong stocks just this year. But that doesn’t match the state of China’s economy. There’s no real sign of a sustainable recovery going on.

Nomura, the Japanese financial group, warned just last month that all this growth might be sitting on “excessive leverage” and building toward bubbles, especially as other signs point to weakness.

Economic weakness lags behind tech boom

August’s economic numbers didn’t help calm things down either. Factory output only grew 5.2% that month, down from July’s 5.7%. That’s the weakest it’s been since August last year. Retail sales rose just 3.4% year-over-year; analysts were hoping for 3.9%, and July did better at 3.7%.

Demand inside the country is still weak, and Beijing is still trying to cut back on excess industrial capacity, which is dragging production.

Chaoping Zhu, global market strategist at J.P. Morgan Asset Management, doesn’t see a turnaround yet. “So far, we have not seen signs of a turnaround in macro fundamentals,” Chaoping said. He added that any momentum might just be riding on hopes that the economy will improve later, not anything solid happening right now.

There are a few sectors showing signs of holding steady. AI, semiconductors, and clean energy companies seem to be stabilizing, based on mid-year reports. Beijing’s push to stop destructive price wars, what they’re calling the “anti-involution” campaign, could also give companies some breathing room on earnings.

One example? Cambricon, a Chinese chipmaker, posted a 4,000% profit jump in just six months. The company made 2.88 billion yuan in the first half of the year, that’s about $402.7 million. That surge is part of China’s effort to strengthen its domestic semiconductor industry. It’s a massive win for Beijing’s strategy, but even that’s not calming nerves.

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