Chinese Stocks Trade in Narrow Range Amid Geopolitical Tensions and Anticipation of Activity Data

Shanghai | EcoPulse24

Chinese stock markets experienced relative calm during the final trading week of the year, with the Shanghai Composite Index steady near 3,960 points and the Shenzhen Composite inching up 0.1% to 13,560 points amid low momentum and subdued trading volumes.

This limited movement came as investors monitored geopolitical developments, notably Chinese military drills around Taiwan, assessing their impact on risk appetite and capital flows.

Markets are also awaiting the release of both official and private Purchasing Managers’ Index (PMI) data, seen as a key indicator of economic activity heading into the new year, which could be pivotal for market direction.

Sector-wise, financials and healthcare led declines, while local technology stocks delivered mixed results, influenced by ongoing tech sell-offs on Wall Street and concerns over inflated AI stock valuations. Notably, Foxconn Industrial dropped 1.7%, Eoptolink fell 0.7%, and CATL slipped 0.2%. Conversely, Cambricon Technologies surged 4.2% and SMIC rose 1.9% on selective buying in semiconductors and AI segments.

On an annual basis, the Shanghai Composite is on track for an 18% gain in 2025, while the Shenzhen Composite is set to jump 30%, continuing the upward momentum from 2024. This robust performance is attributed to government stimulus packages, broad-based gains in technology and AI shares, and easing US-China trade tensions, boosting investor confidence in the medium-term outlook for Chinese markets.