Chinese Stocks Poised for Biggest Annual Gains in Years on Strong Economic Activity Data

Shanghai | EcoPulse24

Chinese stocks are set to end 2025 with their strongest annual gains in several years, driven by a surprising improvement in economic activity data. The Shanghai Composite Index remained stable near 3,969 points, positioning itself for its best annual performance since 2019. Meanwhile, the Shenzhen Composite Index hovered around 13,601 points, aiming for its largest yearly increase since 2020 as of Wednesday's trading.

This positive market performance followed the release of robust Purchasing Managers’ Index (PMI) figures, which boosted investor confidence in China’s economic prospects and increased risk appetite in mainland exchanges.

PMI Data Revitalizes Markets

Official data showed that China's composite PMI rose to 50.7 in December 2025, reaching a six-month high and signaling expanding economic activity. The manufacturing PMI returned to expansion territory for the first time since March, at 50.1, up from 49.2 in November. The non-manufacturing PMI, covering services and construction, climbed to 50.2, its highest in five months, compared to 49.5 the previous month.

A private survey reinforced this positive trend, with the manufacturing PMI unexpectedly rising to 50.1 in December from 49.9 in November, which had been a four-month low.

Leading Stocks Drive Index Gains

Several major companies posted notable gains: Industrial and Commercial Bank of China (ICBC) rose about 0.4%, Contemporary Amperex Technology (CATL) gained 0.3%, and CNOOC added around 1.1%. NAURA Technology Group saw a strong increase of 1.5%, while Zijin Mining Group surged by approximately 5%, benefiting from higher metals prices and renewed investor interest in basic resources stocks.

EcoPulse24 Analysis

According to EcoPulse24, the prospect of Chinese stocks achieving their largest annual gains in years reflects a gradual shift in market confidence toward China’s economy, underpinned by a return to expansion in activity indicators and stronger domestic demand supported by government stimulus measures.

However, this rally remains selective and cautious, given ongoing challenges related to external demand and global trade tensions. In 2026, Chinese equities are likely to remain underpinned by stronger domestic fundamentals, but performance will depend on Beijing’s ability to sustain growth momentum without creating financial imbalances - making the Chinese market an attractive yet calculated risk for investors moving forward.