STOCK MARKET REVIEW: a strong week

China’s growth-heavy mainland markets led gains over the past week, as investors returned to technology shares and positioned for a potentially more stable US-China relationship ahead of this week’s meeting between the two countries’ leaders. The ChiNext Index, dominated by innovative and high-growth companies, rose 3.5% from 3,285.58 on September 14 to 3,399.59 on Monday, while the Shenzhen Component gained 2.6% to 13,730.02. The rally suggests investors remain willing to pay for exposure to China’s technology and advanced-manufacturing sectors despite persistent weakness elsewhere in the economy.

The broader Shanghai Composite advanced 1.7% over the same period, from 3,885.33 to 3,949.91, while the CSI 300 of large Shanghai- and Shenzhen-listed companies gained a more modest 0.7% to 4,539.57. Markets initially struggled after concerns over the pace of global AI development triggered selling in technology shares, but sentiment recovered later in the week. On Friday, the CSI 300 recorded its strongest session in a month as traders looked toward the Trump-Xi meeting, and Monday brought another broad advance, with pharmaceuticals and technology-related shares among the stronger performers.

That optimism contrasted with mixed signals from China’s real economy. August industrial production rose a stronger-than-expected 5.2% year-on-year, but retail sales increased just 0.4%, while fixed-asset investment fell 7.2% during the first eight months of 2026. The divergence helps explain why equity enthusiasm remains concentrated in sectors associated with technological upgrading rather than consumer demand or traditional investment.

Hong Kong participated in the rebound but lagged the mainland. The Hang Seng Index rose 0.6% from 24,884.17 on September 14 to 25,042.71 on Monday. Southbound Stock Connect flows—mainland money entering Hong Kong—remained positive, with net buying of HK$4.07 billion on Monday. Alibaba gained 3.0%, Tencent 2.6% and Baidu 2.1% that session as technology sentiment improved. Hong Kong’s capital-raising pipeline also strengthened: four mainland companies launched offerings seeking up to HK$14.35 billion ($1.83 billion), while IPO and secondary-listing proceeds have reached $45.8 billion this year, nearly double the comparable 2025 total.

US-listed Chinese technology shares also benefited from improving sentiment. Alibaba’s New York ADR closed Monday at $115.77, up 6.0% from $109.23 a week earlier.

The week therefore showed improving risk appetite without signalling a broad recovery in confidence about China’s economy. Capital continued to favour technology, advanced manufacturing and selected healthcare names, while weak consumption and investment remained important constraints. The immediate test is the Trump-Xi summit: investors will be watching for concrete signals on trade and technology restrictions that could determine whether the recent improvement in Chinese equity sentiment has room to continue.