Chinese Stocks Drop, Tech Shares and Capital Boost for Banks Curb Losses

Chinese stock markets fell on Friday amid concerns about rising oil prices, but technology stocks stanched the slide. Chipmaker Enflame's strong debut in Shanghai gave investor sentiment a boost.

The benchmark Shanghai Composite Index declined 1.2 percent on Friday, wrapping up the week with a 1.1 percent loss. The Shenzhen Component Index lost 1.1 percent on the day but fell only 0.3 percent for the week, while the tech-heavy ChiNext edged down 0.5 percent on Friday, retreating 1.1 percent in the past five trading days.

"Chinese investors are more confident toward the tech sector with the government promising to pour more capital into the banking sector aimed at tech companies," said Liu Chenmin, an analyst at GF Securities.

On Monday, China's Ministry of Finance said it will soon issue 300 billion yuan (US$44 billion) of special treasury bonds to support a 360-billion-yuan capital injection package to boost core capital at eight state-owned banks and insurers. The large capital replenishment is aimed at strengthening institutional operational capacity, enhancing resilience to risks and providing stronger support for the nation's economic growth, particularly targeting the tech sector.

Meanwhile, the China Securities Regulatory Commission is shortening the review process for companies seeking to list on Chinese mainland exchanges to about six months. The commission is seeking to make onshore markets the prime choice for high-tech and emerging growth companies. Chinese mainland markets this year have hosted more than 100 new listings that raised more than US$28 billion, a 50 percent increase over full-year 2025 figures.

"Chinese tech firms have been much more resilient than other sectors in a time of economic headwinds," Liu said.

On Friday, shares in Enflame, a looming domestic rival to Nvidia based in Shanghai, surged 179 percent from their offer price in their debut on the STAR Market after an IPO that raised 6.1 billion yuan. The retail portion of the public share sale was oversubscribed 6,000 times. Enflame, backed by tech giant Tencent, is the last of China's so-called "four little dragons" of AI chipmaking to go public. The other three – MetaX, Moore Threads and Biren – debuted since last December with heavy first-day gains.

Shanghai-listed ChangXin Memory Technologies (CXMT), China's largest maker of dynamic random-access memory chips, became the most valuable listed company on Chinese mainland markets this week after its shares surged 6.7 percent on Monday. It kept the crown during the week despite the stock slipping 0.8 percent on Friday. The company earlier reported an 874 percent surge in first-half revenue to 150.3 billion yuan, swinging to profit of 77.6 billion yuan from a year earlier.

Hong Kong's Hang Seng Index tumbled 3.3 percent this week, with its tech index dropping 4 percent in four days. Chinese technology stocks listed in the city were mixed.

Longsys Electronics fell 1.1 percent from their offer price in their Hong Kong trading debut on Tuesday and slumped 3 percent on Friday. The company raised HK$7.1 billion (US$900 million) in its initial public offering. Alibaba gained 0.6 percent on Friday, Tencent and JD.com both advanced 0.7 percent, but computer maker Lenovo dropped 3 percent. Chipmakers also lost ground. Minimax fell 7.5 percent, and Zhipu AI dropped 3 percent.

Major Chinese mining companies listed in Hong Kong also slid on Friday. CMOC tumbled 7.7 percent as the worst-performing bluechip, while Zijin Mining plummeted 6.75 percent.

Elsewhere in Asia, Japan's Nikkei slumped 3.6 percent for the week, and South Korea's Kospi lost 1.2 percent.

On Wall Street, major stock markets rose on Friday after four straight days of declines, as oil prices retreated somewhat but remained above US$100 a barrel. Investors also looked past growing expectations of a Federal Reserve rate hike next week following a US government report showing persistent inflation. For the week, the broad S&P 500 index declined 0.8 percent, and the Nasdaq lost about 0.7 percent. In Europe, the Stoxx600 index fell 0.5 percent on Friday after the European Central Bank raised interest rates for the second time this year.