STOCK MARKET REVIEW: Confidence in tech

China’s equity markets sent a clear message over the past week: investors remain willing to pay for Beijing’s technology priorities even as confidence in the broader economy stays fragile. The STAR 50, which tracks leading companies on Shanghai’s technology-focused STAR Market, was the standout, rising 2.9% from 1,737.77 on August 10 to 1,788.85 on August 17. The last day alone brought a 4.1% jump as semiconductor shares rallied on strong earnings and renewed enthusiasm around artificial intelligence. The concentration of gains in chips and AI hardware suggests the market is increasingly distinguishing strategically supported industries from China’s weaker consumer economy.

That divide was also visible across the wider mainland market. The Shenzhen Component, with heavier exposure to technology and advanced manufacturing, climbed 2.7% over the seven-day period, from 14,316.96 to 14,704.27, while the Shanghai Composite gained just 0.4%, from 3,966.59 to 3,982.65. The large-cap CSI 300 rose 0.8% to 4,741.10 from 4,702.02. Semiconductor and AI-linked stocks repeatedly led gains during the week, while consumer shares periodically lagged—a pattern reinforced by Monday’s economic data showing July retail sales rose just 0.6% year-on-year, industrial production slowed to 4.5% and fixed-asset investment fell 6.7% in the first seven months.

Hong Kong told a more cautious story. The Hang Seng Index fell 1.9% over the seven days, from 25,937.49 to 25,453.23, despite Monday’s 1.3% rebound, while the Hang Seng TECH Index dropped 2.8% from 4,919.46 to 4,782.03. That contrast with mainland technology shares matters because Hong Kong is more exposed to international capital and to internet and consumer-facing companies such as Tencent and Alibaba. Mainland investors nevertheless remain an increasingly important force in the city: Southbound Stock Connect turnover, which channels mainland money into Hong Kong shares, averaged more than HK$129 billion daily in July, more than triple its level two years earlier.

Corporate results reinforced the split. JD.com beat second-quarter profit and revenue expectations, but revenue still fell 2.9% year-on-year and its US-listed shares initially declined after the release, highlighting continued investor concern about weak Chinese consumption. Meanwhile, Shein is preparing a Hong Kong IPO that could value it at $25 billion to $30 billion, another test of international demand for China-linked consumer companies.

The week therefore points less to broad confidence in China’s recovery than to selective confidence in its industrial strategy. Capital is flowing toward semiconductors, AI infrastructure and advanced manufacturing, while consumer-sensitive and Hong Kong-listed technology shares remain more exposed to economic weakness. The key question next week is whether that policy-driven technology rally can broaden—or whether disappointing domestic demand keeps the market increasingly divided between strategic winners and the rest of the economy.