Eliza Wong
Market Rebounds with Selective Strength
China’s major indices staged an impressive recovery during Thursday’s session (September 10), with the ChiNext and STAR 50 indices showing particular strength while Hong Kong markets also advanced. The Shanghai Composite gained 0.13% to close at 3,812.22 points, the Shenzhen Component Index rose 0.38% to 12,557.68 points, and the ChiNext Index jumped 1.27% to 2,904.27 points. The STAR 50 Index climbed 1.09%, with combined turnover across Shanghai, Shenzhen and Beijing exchanges reaching 2.0042 trillion yuan, down 148.2 billion yuan from the previous session. While resource sectors including non-ferrous metals, coal, chemicals, and power faced selling pressure, several key themes emerged as market leaders, driving the broader recovery. The trading session demonstrated that despite some sector weakness, investor appetite remains strong for growth-oriented segments with clear catalysts.
Film Stocks Shine on Holiday Season Prospects
Entertainment stocks emerged as one of the day’s strongest performers, with Happiness Blue Ocean surging nearly 14% after touching the daily limit-up during the session, reaching its highest level in nearly nine years. Jinyi Film and Media and Yue Media both hit the 10% limit-up, while Huayi Brothers and Mango Excellent Media gained over 5%. The sector’s strong performance comes amid encouraging data from China’s summer box office season. According to the China Film Administration, the 2025 summer season (June 1-August 31) generated 11.966 billion yuan in box office revenue with 321 million admissions, representing year-on-year increases of 2.76% and 12.75% respectively. The positive momentum is expected to continue into the National Day holiday period. Several major productions are scheduled for October 1 release, including ‘Assassination Novelist 2’ (led by Huace Film with Maoyan participation), ‘Panda Plan 2’ (Maoyan participating in distribution), and ‘Three Kingdoms星空’ (produced by Guomai Culture and Enlight Media). Additional titles including ‘Catch the Spy,’ ‘Volunteers Part 3,’ ‘Penghu Naval Battle,’ and ‘A Place for Heroes’ are also in the pipeline for the important holiday season.
Analysts Bullish on Film Industry Recovery
China International Capital Corporation Limited (中金公司) analysts noted that film demand has shown clear improvement since late July, with some productions demonstrating potential for long-tail revenue through both box office performance and IP derivative businesses. The investment bank suggests monitoring the performance of domestic films and the scheduling of imported titles, as major franchise sequels including ‘Now You See Me 3,’ ‘Zootopia 2,’ and ‘Avatar 3’ are expected to arrive in Chinese theaters during the fourth quarter of 2025, providing additional support to full-year box office results. The combination of strong domestic content and returning international franchises creates a favorable environment for cinema operators and content producers alike.
AI Stocks Stage impressive Comeback
The artificial intelligence sector delivered one of the day’s most impressive performances, with co-packaged optics (CPO) and computing power stocks leading the advance. Jiayuan Technology (688388) soared by the 20% daily limit, while Shenghong Technology advanced approximately 12%, approaching the 300 yuan per share level and setting fresh record highs. Other sector leaders including Dongshan Precision, Industrial Fulian, and Jingwang Electronics all reached the 10% limit-up threshold. The strong showing comes amid encouraging developments from global technology leaders, suggesting sustained demand for AI infrastructure. Oracle announced on September 9 that its cloud infrastructure revenue would jump 77% to $18 billion in fiscal 2026, exceeding market expectations. CEO Safra Catz outlined an ambitious growth trajectory, with cloud infrastructure revenue targets reaching $32 billion, $73 billion, $114 billion, and $144 billion in subsequent years.
Broadcom Results Validate Sector Strength
Broadcom recently reported impressive results for its third fiscal quarter ending August 3, 2025, with revenue, profit, and guidance all surpassing expectations. The company posted revenue of $15.95 billion, representing 22% year-over-year growth and exceeding both analyst consensus of $15.84 billion and the company’s own guidance of $15.8 billion. For the fourth quarter, Broadcom provided strong guidance of approximately $17.4 billion in revenue, representing 23.8% growth and beating market expectations of $17.05 billion. Most significantly, the company projected its AI chip business would grow to $6.2 billion in the fourth quarter, marking 11 consecutive quarters of growth with a 19% sequential increase. This guidance exceeded market expectations by over 6%. China Securities (CITIC Construction Investment) analysts noted that Broadcom’s performance further validates the high growth trajectory of the computing power industry chain. With AI large language models still at relatively low user penetration rates and the industrial application cycle just beginning, computing investment driven by large models remains in its early stages. Capital expenditure is expected to grow alongside increasing model revenue, creating significant potential upside for sector participants.
Bubble Mart Faces Secondary Market Pressure
While several sectors enjoyed strong gains,潮流玩leader Bubble Mart faced significant selling pressure, declining 4.5% to close at HK$275.2 per share after falling more than 7% during the session. The company’s market capitalization now stands at approximately HK$369.6 billion. The decline continues a negative trend for the stock, which has fallen about 18% over the past 11 trading sessions since reaching its all-time high of HK$339.8 on August 26. The pressure appears linked to developments in the secondary market for the company’s products. Reports indicate that Bubble Mart is experiencing a new wave of price declines in the resale market, with previously high-demand items seeing significant value erosion. The Labubu Strange Taste Convenience Store enamel card has fallen from over 4,000 yuan at its peak to just over 400 yuan, while larger figurines including Big Angel and Big King at Home have dropped to near their original retail prices. Even previously popular items like the Front High Energy enamel pendant blind box have fallen below their original retail value.
Analysts Diverged on Long-Term Impact
Some analysts attribute the secondary market weakness to the company’s increased production capacity, which has made products more readily available in the primary market. The recent mini Labubu series release demonstrated how quickly hype can dissipate – the hidden edition initially resold for nearly 1,000 yuan on release day (August 28), with complete sets trading between 1,500 and 3,200 yuan. However, prices began declining after just one week of strong secondary market activity. Morgan Stanley offered a different perspective, noting that secondary market交易prices may not accurately reflect true supply and demand dynamics. The investment bank suggested that the resale market represents only a small portion of overall supply and demand, particularly as Bubble Mart increases production capacity and cracks down on scalper activity. Morgan Stanley maintains that the company’s long-term growth prospects remain strong due to its diversified IP portfolio and international expansion efforts.
Market Diversity Creates Opportunities
Beyond the standout performers, several other sectors showed strength during Thursday’s session. The satellite internet concept advanced, with Sanway Communication and Sunsea Intelligent hitting the 10% limit-up while China Unicom gained over 5%. Tourism and travel-related stocks also rallied, with Caesar Tourism and Tianfu Culture & Tourism reaching the daily limit-up while Dalian Sunasia advanced nearly 8%. The day also saw a notable debut on the ChiNext board, with Affinado surging 170% to close at 74.77 yuan per share after reaching as high as 87.98 yuan during the session (a 217.7% increase). At its peak, investors could have realized profits exceeding 30,000 yuan per lot. Hong Kong markets also participated in the positive sentiment, with Hongtai Precision gaining nearly 13%, Bilibili rising over 7%, and Lenovo Group advancing almost 5%. The diversified nature of Thursday’s rally suggests broad-based optimism rather than narrow sector-specific enthusiasm.
Navigating Volatility with Sector Insights
Today’s market action demonstrates the importance of sector selection in navigating China’s equity markets. While broader indices showed modest gains, the disparity between winning and losing sectors was substantial. Investors who identified early signals in the film and AI sectors were rewarded with significant outperformance. The contrasting performance between Bubble Mart and other growth stocks highlights how company-specific factors can override broader sector trends. For investors seeking exposure to China’s consumer and technology stories, understanding both industry dynamics and individual company fundamentals remains crucial. As we look toward the remainder of September and the important National Day holiday period, monitoring box office performance, AI infrastructure developments, and consumer trends will provide valuable insights for portfolio positioning. The market continues to offer opportunities for those who can identify sustainable growth stories amid the daily volatility. Consider discussing these sector trends with your financial advisor to determine appropriate exposure levels based on your investment objectives and risk tolerance.
