Mainland stock market hits 11-year high

The bullish momentum recently seen in the Chinese market is likely to continue thanks to the structural opportunities provided by the country's rapid adoption of emerging technologies and ongoing economic recovery, said experts.

Their comments were made on Monday after the benchmark Shanghai Composite Index climbed to an 11-year high of 4225.02 points. The Shenzhen Component Index jumped 2.16 percent and the tech-heavy ChiNext in Shenzhen surged 3.5 percent. Combined trading value on the Shanghai, Shenzhen and Beijing bourses topped 3.56 trillion yuan ($520 billion), up nearly 16 percent from thebull previous trading day.

A-share listed semiconductor firms fueled the Monday rally, reporting an average daily price gain of 5.01 percent.

Fang Jian, manager of the integrated circuit hybrid fund at Yinhua Fund, said the strong performance of Chinese tech companies may have just begun in earnest. The artificial intelligence surge and semiconductor localization will generate enormous investment opportunities in 2026 as chipmakers will see "a big year of orders".

On Friday, China's top internet, economic and industry regulators jointly issued a guideline to regulate the application and innovative development of AI agents.

While foundational models remain the key investment thesis at the current stage, investors are recommended to keep a close eye on power suppliers, companies with deeper and earlier AI adoption, as well as AI enablers that benefit from China's semiconductor localization trend, experts from Morgan Stanley wrote in a report released on Sunday.

The development and application of new thematic indices, analysis tools driven by AI innovation and the completion of financial market infrastructure have fueled the Chinese capital market with robust momentum, said David Day, managing director of the London Stock Exchange Group for Asia-Pacific.

China's strong economic numbers over the past few months -including exports and industrial production — have provided more confidence to international investors, Thomas Fang, head of China Global Markets at UBS, said during a news briefing on Monday, adding that China is likely to reenter an inflationary cycle in the third quarter.

Meng Lei, China equity strategist at UBS Securities, upgraded his forecast for A-share companies' profitability growth rate this year to 11 percent, up from 8 percent at the end of last year. This will serve as one major driver for an A-share bull run throughout 2026, Meng said.

Continued capital inflows into the A-share market will be another engine, which will be comprised of household savings directed into wealth management products, recovery in the issuance of mutual fund products, thematic exchange traded funds and high net wealth individuals investing more in private equities or quantitative funds, he added.

Market sentiment was also buoyed on Monday as the Foreign Ministry announced that United States President Donald Trump will pay a three-day state visit to China from Wednesday.

The visit, which will take place as scheduled, will directly improve the risk appetite in the A-share market, said Chen Guo, chief strategist of Eastmoney Securities.

Overall market confidence will be strengthened. Export companies may benefit in anticipation of a marginal easing in tariff tensions. In the event of phased procurement or investment arrangements, a potential sentiment-driven recovery may be seen in companies specializing in cyclical products, power equipment and machinery, Chen said.