Changpeng Wan
Morning Session Sees Selective Rally Amid AI Dominance
Chinese equities advanced during the morning session on August 12, 2025, with the ChiNext Index leading gains at +0.91% as AI hardware stocks staged another impressive rally. The Shanghai Composite rose 0.53% while the Shenzhen Component gained 0.34%, though over 3,300 stocks declined despite index gains. Trading volume surged to 1.19 trillion yuan – a 590 billion yuan increase from the previous session – signaling strong institutional participation in favored sectors. This divergence highlights how AI hardware stocks continue to drive market momentum while traditional sectors lag.
Key Market Developments at Midday
Index Performance Highlights
– Shanghai Composite: +0.53%
– Shenzhen Component: +0.34%
– ChiNext Index: +0.91%
Trading Volume and Breadth
– Total turnover: 1.19 trillion yuan
– Volume increase: +590 billion yuan from prior session
– Declining issues: Over 3,300 stocks
– Market divergence: Narrow leadership despite index gains
AI Hardware Stocks Power Market Advance
The artificial intelligence hardware sector emerged as today’s decisive market driver, extending its remarkable 2025 rally. This marks the third consecutive week where AI hardware stocks have outperformed broader indices by significant margins.
Standout Performers
– Cambricon: +15% (year-to-date gain exceeds 210%)
– Shenghong Technology: Hit all-time high (5th record high this quarter)
– Liquid cooling server specialists: Collective 7-12% gains
Growth Catalysts
– Accelerated data center expansion across China’s tech hubs
– Government subsidies for domestic AI chip development
– Breakthrough orders from cloud service providers
Sector Rotation: Winners and Losers
Leading Sectors
– Brain-computer interface technology: Marand +10%
– Xinjiang regional stocks: Xinjiang Communications Construction third consecutive limit-up
– Port logistics operators: Average 4.2% gain
Underperforming Areas
– Lithium mining: -3.7% sector average
– Military-industrial complex: Jieqiang Equipment -5.2%
– Rare earth minerals: -2.8%
– Solar photovoltaics: -1.9%
Technical Analysis and Market Structure
The ChiNext’s relative strength reflects growing institutional conviction in innovation-driven enterprises. Volume concentration in AI hardware stocks suggests professional money positioning for long-term thematic plays rather than broad market exposure.
Critical Support Levels
– ChiNext: 2,800-point psychological barrier
– AI hardware sector: 20% above 200-day moving average
– Market breadth: 45% of stocks above 50-day average
Divergence Signals
– Advance-decline ratio: 1:2 despite index gains
– Volume concentration: Top 5 AI stocks = 18% of total turnover
Strategic Implications for Investors
The ongoing leadership of AI hardware stocks presents both opportunities and risks. While momentum favors continued upside in the near term, narrowing participation warrants selective positioning.
Portfolio Considerations
– Overweight quality AI infrastructure providers
– Underweight commoditized technology plays
– Hedge with defensive sectors showing relative strength
Afternoon Session Watchlist
– Cambricon’s options activity (put/call ratio)
– Short-interest changes in solar stocks
– Mainland-Hong Kong Stock Connect flows
Market Outlook and Actionable Guidance
The persistent strength in AI hardware stocks confirms structural leadership in China’s innovation economy. Investors should monitor these key developments:
– Government policy updates on semiconductor self-sufficiency
– Earnings revisions for AI component manufacturers
– Global AI infrastructure spending trends
Position strategically in companies with proprietary technologies and scalable production capacity. Consider taking partial profits in extended AI hardware positions while maintaining core exposure. Monitor market breadth indicators for signs of healthier participation beyond the current narrow leadership.
Review your portfolio’s sector allocation and rebalance toward quality innovators with strong balance sheets. Subscribe to real-time market alerts and consult licensed financial advisors before making investment decisions in this volatile yet opportunity-rich landscape.
