Chinese Stocks Rally to Four-Year High in Strong Start to 2026

(Bloomberg) -- Chinese stocks climbed to multi-year highs, fueled by sustained optimism implicit the country’s AI advances and emerging signs of an economical recovery.

The benchmark CSI 300 Index precocious 1.6% to adjacent astatine its highest level successful 4 years, portion the Shanghai Composite Index roseate 1.5% to its strongest since July 2015. Materials and exertion shares were among the day’s champion performers.

Buoyed by upbeat manufacturing activity, President Xi Jinping’s affirmative appraisal of the system and a continued rally successful the artificial quality trade, 2026 has started disconnected with nary shortage of optimism. Investors expect the upward momentum that made Chinese equities a planetary standout past twelvemonth to extend, acknowledgment to Beijing’s backing for cardinal sectors and measures to revive the ailing spot market.

“Sentiment has been improving arsenic a fewer things person travel unneurotic astatine once,” said Billy Leung, an concern strategist astatine Global X Management. “Policy visibility has accrued earlier than usual, positioning was precise airy into year-end and determination are aboriginal signs that parts of the economy, peculiarly manufacturing, are stabilizing.”

Turnover successful the onshore marketplace roseate to astir 2.8 trillion yuan ($400.6 billion), the astir since mid-September, portion outstanding loans taken retired by investors to acquisition stocks hovered astir a grounds high.

Tuesday’s gains travel amid different beardown time successful planetary markets, with assorted indexes climbing to caller highs contempt tensions brewing successful Latin America. Tech shares, peculiarly those tied to the AI proviso chain, remained successful focus.

The rally, however, has started to amusement signs of overheating. The 14-day comparative spot index, a momentum indicator, connected the Shanghai Composite climbed supra 75 connected Tuesday, entering method overbought territory for the archetypal clip since aboriginal September. The CSI 300 is approaching that level too, which was past breached successful October.

Still, those worries for present are being overshadowed by investors’ condemnation that much upside lies ahead. A robust listing pipeline of onshore AI-related companies volition apt support sentiment buoyant pursuing 2 blockbuster trading debuts past month. Among them are ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co., each of which whitethorn question a valuation of 200 cardinal yuan to 300 cardinal yuan, respectively.

Optimism astir Chinese AI has lone grown this year, helped by DeepSeek’s insubstantial outlining a much businesslike attack to improvement and the expanding planetary popularity of Kuaishou Technology’s video AI app.

“I deliberation DeepSeek is making a breakthrough, and galore different Chinese AI companies are making breakthroughs arsenic well,” Hao Hong, main concern serviceman astatine Lotus Asset Management, said connected Bloomberg TV. Liquidity continues to rise, creating a affirmative situation conducive for hazard taking, helium added.