– Global equity markets showed mixed performance, with Japanese and Korean indices leading gains while Hong Kong experienced volatility.
– U.S. semiconductor stocks surged due to AI-driven demand, highlighted by AMD’s record-breaking rally.
– Gold prices breached $4,000 per ounce as safe-haven assets attracted capital amid geopolitical uncertainties.
– Chinese policymakers unveiled liquidity injections and procurement reforms to bolster domestic industries and stabilize markets.
Global Market Dynamics During China’s National Day Break
As China’s extended National Day holiday concludes, international investors are closely monitoring how global events might influence the reopening of Chinese equity markets. The eight-day period saw significant movements across major indices, commodities, and tech sectors, setting the stage for potential volatility in A-shares. With the Chinese stock market set to resume trading at 9:30 AM Beijing Time, understanding these interconnected trends is crucial for anticipating short-term price action and longer-term strategic positioning. This analysis delves into key developments from Japan’s stock surge to U.S. tech breakthroughs, providing a roadmap for navigating post-holiday opportunities in Chinese equities.
Chinese equity markets have historically reacted to global cues after extended breaks, and this holiday was no exception. The convergence of AI advancements, monetary policy shifts, and geopolitical tensions creates a complex backdrop for the Shanghai and Shenzhen exchanges. Investors should prepare for a possible squeeze as pent-up demand and external momentum could drive initial rallies. By examining each factor in detail, we can identify which sectors are poised to lead and which might face headwinds in the coming weeks.
Asian Markets: Leadership and Volatility
Japanese equities emerged as standout performers during the holiday, with the Nikkei 225 index breaking through the 48,000-point barrier for the first time on October 6. This record high was largely fueled by political developments, including the election of Sanae Takaichi (高市早苗) as the new leader of the Liberal Democratic Party, which bolstered investor confidence in economic reforms. South Korea’s KOSPI index also posted strong gains, rising 3.6%, while Australia’s S&P/ASX 200 added 1.12%. These advances underscore the resilience of Asian markets despite global uncertainties, and they could provide tailwinds for Chinese equity markets upon reopening.
In contrast, Hong Kong’s Hang Seng Index displayed a more volatile trajectory, climbing initially on October 2 before giving back gains to end the period down 1.15% at 26,829.46 points. This whipsaw action reflects lingering concerns over property sector risks and regional trade dynamics. European indices, including Germany’s DAX (up 2.11%) and the UK’s FTSE 100 (up 1.42%), offered additional support to global sentiment, but the mixed signals from Hong Kong highlight the need for caution. For Chinese equity markets, the divergence between mainland and offshore performance could influence cross-border capital flows and sector rotations.
U.S. and European Indices: Steady Gains with Tech Outperformance
U.S. benchmarks recorded modest advances, with the Nasdaq Composite rising 0.57%, the Dow Jones Industrial Average up 0.44%, and the S&P 500 gaining 0.39%. However, the Philadelphia Semiconductor Index stole the show, surging 4.16% over the holiday, driven by a landmark agreement between AMD and OpenAI. This deal, which involves supplying 6 gigawatts of GPU computing power over several years, signals robust demand for AI infrastructure and has implications for Chinese tech firms engaged in similar fields. The first batch of chips is scheduled for deployment in the second half of 2026, reinforcing the long-term growth narrative for semiconductors.
European markets mirrored this optimism, with France’s CAC 40 edging up 1.0% amid stable economic data. The synchronized upward move across developed markets suggests that global risk appetite remains intact, which could benefit Chinese equity markets through improved foreign investor sentiment. However, any disruptions from U.S. fiscal policy or European energy crises might temper enthusiasm, making it essential to watch for correlations between overseas indices and A-share movements.
Semiconductor and AI Sector: Catalysts for Growth
The semiconductor industry’s standout performance during the holiday underscores its pivotal role in the global tech ecosystem. AMD’s stock skyrocketed more than 30% intraday on October 6, marking its largest single-day gain in over nine years, after announcing the multi-year GPU supply pact with OpenAI. This collaboration, focused on delivering 6 GW of computing capacity, highlights the insatiable demand for AI training and inference capabilities. For Chinese equity markets, this trend validates investment themes around domestic chip manufacturers and AI-enabling technologies, which are central to China’s “15th Five-Year Plan” for technological self-sufficiency.
Beyond hardware, AI applications are gaining traction in consumer electronics. Meta’s Ray-Ban smart glasses, equipped with AI features, sold out across retail outlets, with waitlists extending into November. Andrew Bosworth (安德鲁·博斯沃思), Meta’s Chief Technology Officer, noted that demand exceeded expectations and that the company is ramping up production to meet orders. This enthusiasm for AI-integrated devices could spill over into Chinese tech stocks, particularly those involved in wearable technology and augmented reality. Huatai Securities has expressed bullish views on the AI glasses segment, indicating potential opportunities for investors in related A-share companies.
Storage and Computing Demand: Implications for Chinese Firms
The OpenAI-AMD agreement is not an isolated event; it reflects broader capacity constraints in high-performance computing. Data centers and cloud providers worldwide are scrambling to secure advanced chips, which could benefit Chinese firms like Semiconductor Manufacturing International Corporation (SMIC) and Yangtze Memory Technologies if they can capture niche markets. Additionally, energy storage demand is soaring, with top-tier battery manufacturers reporting order backlogs stretching into early 2026. This aligns with China’s push for renewable energy and electric vehicle adoption, creating synergies between the semiconductor and green tech sectors within Chinese equity markets.Commodities and Safe-Haven Assets: Gold’s Historic Rally
Gold prices shattered records during the holiday, with London spot gold surpassing $4,000 per ounce for the first time ever on October 8. COMEX gold futures followed suit, trading at $4,066 per ounce, bringing year-to-date gains to over 52%. This surge was partly driven by the U.S. federal government shutdown, which prompted investors to seek refuge in hard assets. UBS projects gold could reach $4,200 per ounce by mid-2026, while Goldman Sachs raised its December 2026 forecast to $4,900, up from a previous estimate of $4,300. For Chinese equity markets, gold’s strength may signal inflationary pressures or geopolitical risks that could influence monetary policy and sector allocations.
Bitcoin futures also advanced 9.5%, and silver jumped 3.8%, indicating broad-based interest in alternative investments. The People’s Bank of China (中国人民银行) has been monitoring these trends, as commodity price swings can affect import costs and industrial profitability. Historically, rising gold prices have correlated with underperformance in growth stocks, so investors in Chinese equity markets should balance exposure to cyclical sectors with defensive positions in commodities or related mining stocks.
Central Bank Policies and Liquidity Measures
On October 9, the People’s Bank of China (中国人民银行) conducted a 1.1 trillion yuan three-month reverse repo operation, complementing earlier seven-day injections to create a net liquidity surplus of 300 billion yuan. This aggressive easing aimed to offset 800 billion yuan in maturing reverse repos and 500 billion yuan in policy-driven financial tool expirations, ensuring ample funding for the financial system. Such measures are critical for stabilizing Chinese equity markets, as they reduce borrowing costs and support corporate earnings, particularly for small and medium-sized enterprises.
Concurrently, the China Securities Regulatory Commission (CSRC) emphasized technology-focused initiatives under the “15th Five-Year Plan,” prioritizing hard tech and allocating IPO quotas to long-term funds like mutual funds and social security portfolios. These steps align with broader efforts to channel capital into strategic industries, reducing reliance on foreign technology and fostering innovation. For investors, this means that sectors like AI, semiconductors, and renewable energy could receive preferential treatment, making them core components of any Chinese equity markets portfolio.
Policy Reforms and Domestic Industry Support
In a move to bolster local businesses, the State Council issued a notice granting a 20% price evaluation preference for domestically produced goods in government procurement, effective January 1, 2026. This policy defines domestic products as those manufactured within China with a specified proportion of local component costs, and it applies to both goods and services procured by public entities. By creating a more level playing field, the government aims to stimulate demand for homegrown innovations, which could benefit listed companies in sectors like industrial machinery, electronics, and healthcare within Chinese equity markets.
This initiative is part of a broader “liquidity easing + industrial support” policy mix designed to counter external trade pressures and promote self-sufficiency. For instance, the NEV sector saw charging volumes hit a record high during the holiday, exceeding 10 million kilowatt-hours on the first day, while battery cell orders are backlogged into 2026 due to robust demand. These developments highlight the government’s success in fostering high-growth industries, though investors must remain vigilant about overcapacity risks in certain segments.
Automotive and Biotech Highlights
September delivery data revealed strong performances from NEV makers, with Nio, Xpeng, and Leapmotor posting record numbers. However, BYD reported a year-on-year decline in sales to 396,300 vehicles, signaling intensified competition. Xiaomi Auto delivered over 40,000 units in September, and Leapmotor’s full lineup reached 66,657 units, underscoring the sector’s dynamism. In biotech, Changfeng Pharmaceutical’s Hong Kong IPO saw shares soar more than 230% on its debut, with handsomely profits for subscribers. This rally, coupled with gains in stocks like I-Mab and Harbour BioMed, may be linked to the Nobel Prize in Physiology or Medicine, drawing attention to healthcare innovations within Chinese equity markets.
Post-Holiday Investment Outlook for Chinese Equities
As trading resumes, several top asset managers express optimism about Chinese equity markets, citing improving consumption trends and supportive global conditions. Huajin Securities believes technology-led growth will remain dominant, while China Galaxy Securities recommends focusing on themes like “new quality productive forces,” anti-internalization, and major consumer segments. The “two heavies”—national major strategy implementation and key area security capacity building—are also highlighted as potential investment avenues. These insights suggest that the post-holiday period could see a rotation into undervalued tech stocks with upward earnings revisions.
Wind data shows that nearly 200 stocks have been selected as October “golden stocks” by brokers, with GigaDevice earning recommendations from five institutions. This concentration in tech and growth aligns with the view that Chinese equity markets are entering a phase where quality companies with solid fundamentals will outperform. Investors should consider adopting a “high-to-low” strategy, shifting from overheated sectors to laggards in the tech space that show improving profitability.
Sector Recommendations and Risk Management
AI computing, storage chips, and renewable energy are expected to be high-interest areas, but diversification is key to managing volatility. Monitoring policy announcements from the People’s Bank of China (中国人民银行) and CSRC will provide early signals of market direction. Additionally, global events like U.S. fiscal decisions or commodity price swings could inject uncertainty, so maintaining a balanced portfolio with exposure to both defensive and growth assets is advisable. For those tracking Chinese equity markets, the immediate focus should be on opening sessions for clues about institutional sentiment and retail participation.
Strategic Takeaways for Market Participants
The holiday period underscored the interconnectedness of global markets and their impact on Chinese equities. Key themes include the AI revolution, commodity inflation, and policy-driven liquidity, all of which will shape A-share performance in the near term. Investors should prioritize sectors aligned with national strategies, such as semiconductors and green tech, while hedging against external shocks through gold or stable dividend payers. The anticipated Chinese equity markets rally at 9:30 AM Beijing Time could present buying opportunities, but thorough due diligence is essential to avoid overvalued segments.
Looking ahead, the fourth quarter is likely to emphasize technological innovation and consumption recovery, with potential surprises from biotech and advanced manufacturing. By staying informed on regulatory updates and corporate earnings, market participants can position themselves to capitalize on emerging trends. As always, a disciplined approach to risk management will be critical in navigating the inherent volatility of Chinese equity markets. Take action now by reviewing your portfolio allocations and consulting latest analyst reports to align with the evolving investment landscape.