China Stocks Hit Decade High as Metals and Financials Drive Market Rally
Chinese equity markets achieved their highest levels in over a decade, with the Shanghai Composite Index reaching its peak since July 2015. The rally was driven by non-ferrous metals and financial sectors, with insurance stocks surging 6% and materials gaining up to 5% on record copper prices. Technology stocks maintained momentum with Hong Kong tech majors posting their third consecutive session of gains.
*this image is generated using AI for illustrative purposes only.
Chinese equity markets reached their highest levels in more than a decade on Tuesday, driven by strong performances in non-ferrous metals and financial sectors as investor sentiment remained upbeat ahead of the Lunar New Year holiday. The rally extended the market's impressive momentum that began in mid-December.
Market Performance Overview
The Shanghai Composite Index and CSI300 Index both climbed 1.20% by the lunch break, with the Shanghai Composite touching its highest level since July 2015. Hong Kong markets also participated in the rally, with the Hang Seng Index rising nearly 2.00%. The Shanghai Composite has gained more than 6.00% since mid-December, reflecting sustained investor confidence.
| Index | Performance | Significance |
|---|---|---|
| Shanghai Composite | +1.20% | Highest level since July 2015 |
| CSI300 | +1.20% | Decade-high performance |
| Hang Seng | +2.00% | Strong Hong Kong participation |
| Hang Seng Tech | +2.20% | Third consecutive session of gains |
Sector Leadership Shifts to Metals and Financials
Non-ferrous metals and materials sectors emerged as the primary drivers of Tuesday's rally, with gains of 4.00% and 5.00% respectively both onshore and offshore. The surge was supported by copper prices hitting record highs, benefiting mining companies significantly. Zijin Mining jumped 5.70%, exemplifying the sector's strong performance.
The financial sector also delivered impressive gains, with the CSI Insurance Index surging nearly 6.00% on expectations of stronger product sales. Securities firms climbed more than 3.00%, contributing to the broad-based market rally.
| Sector | Performance | Key Drivers |
|---|---|---|
| Non-ferrous Metals | +4.00% to +5.00% | Record copper prices |
| Insurance | +6.00% | Stronger product sales expectations |
| Securities | +3.00% | Positive market sentiment |
| Technology (HK) | +2.20% | Third consecutive session gains |
Technology Sector Maintains Momentum
Technology stocks continued their strong performance, particularly in Hong Kong where tech majors extended gains for a third consecutive session, rising 2.20%. Baidu shares climbed to their highest level since August 2023, demonstrating sustained investor interest in the sector.
UBS analysts maintain their overweight position on tech and internet stocks, expecting artificial intelligence progress to continue driving growth. The bank also favors the solar supply chain as a way to benefit from global energy storage expansion and China's domestic initiatives.
Analyst Outlook and Market Dynamics
UBS analysts noted that clients see limited downside risk in January, with capital returning to popular themes and a tactical upside window before the holiday lull. The rebound in Chinese equities since December has boosted confidence, with many investors planning to stay active until the later-than-usual Spring Festival.
"The rebound in Chinese equities since December has boosted confidence, with many investors planning to stay active until the later-than-usual Spring Festival in 2026," UBS analysts stated in their research note.
The analysts emphasized that clients are positioning for continued momentum, supported by ample market liquidity and positive policy signals heading into the Lunar New Year period.
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