China Stock Markets Rally on Tech Shares, Prospects for Middle East Peace

China's tech shares on the ChiNext and STAR Market continued to lead stock rallies this week, outperforming the main boards in Shenzhen and Shanghai.

The ChiNext in Shenzhen rose 5.4 percent this week to a record 4,252, and the Shanghai STAR Market 50 Index surged 8.8 percent before the markets closed on Friday for the Dragon Boat Festival holiday. By comparison, the benchmark Shanghai Composite Index edged up 0.79 percent this week and the Shenzhen Component Index gained 3.4 percent.

"The markets continued to be driven by tech shares, with clear signals from Chinese authorities that the sector will receive more support," said Jiang Yifan, an analyst with Shenwan Hongyuan Securities.

On Wednesday, Wu Qing, chairman of China Securities Regulatory Commission, announced new policies that included further easing of STAR Market listing rules for companies engaged in AI, quantum computing, biotech and robotics. At the same time, Wu said the commission will strictly enforce rules of illegal or irregular investment practices, including the hyping of "hot" concepts under the guise of technology, market manipulation and insider trading.

On Thursday, leading Chinese chipmaker Cambricon rose 14.2 percent in Shanghai to a record 1,507 yuan (US$223). Among other leading gainers, Bright Laster Tech, Jiuzhouyigui Environmental Technology, Crystal Growth & Energy Equipment, carbon composite supplier KBC and Bingo Software all rose 20 percent.

In Hong Kong, the Hang Seng index fell 3.2 percent in the week, its steepest loss in nearly four months, before closing for a holiday on Friday. In Thursday trading, blue chip biotech shares led gainers, with WuXi AppTec rising 5.1 percent and Innovent Biologics up 1.7 percent. Computer maker Lenovo dropped 4.4 percent and Pop Mart, maker of Labubu monster dolls, fell 4.1 percent.

During the week, eight Chinese companies launched share sales for IPOs in Hong Kong. As of June 13, 78 companies had begun trading in Hong Kong this year after IPOs that raised an aggregate HK$203 billion (US$26 billion). That volume ranked second globally, trailing the Nasdaq in New York after the blockbuster SpaceX IPO boosted the value of IPOs there.

Consulting firm Deloitte said there are more than 670 applicants in the pipeline for listing in Hong Kong.

"The SpaceX IPO in the US reflects global technological innovation accelerating into a new stage, represented by artificial intelligence, commercial aerospace and advanced manufacturing," said Alvin Tse, a capital markets service leader at Deloitte China. "Hong Kong is well-positioned to seize the historic opportunities brought about by the technological revolution and industrial transformation."

Elsewhere in Asia, Japan's Nikkei rose 0.28 percent on Friday, wrapping up the week with a jump of 7.92 percent. South Korea's Kospi dipped 0.13 percent on Friday but still surged 11.4 percent for the week on positive investor sentiment toward chipmaking companies and optimism about a permanent peace agreement the Middle East.

On Wall Street, markets were also closed for a holiday on Friday. On Thursday, the broad S&P 500 index closed up 1.1 percent and the Nasdaq gained 1.9 percent as Iran and the US signed a preliminary peace framework. However, European markets ended the week lower on Friday after the first round of negotiations between Iran and the US on a permanent end to the war were called off amid intense Israeli strikes on Lebanon. The Stoxx600 index closed down 0.24 percent.