Market Volatility Whipsaws China Shares, Monday Outlook Brightens

China's stock markets, whipsawed by volatility this week in global tech and precious metals markets, are poised for a positive start on Monday after a stunning rebound on Friday in New York markets.

The Dow Jones index soared 2.5 percent on Friday to close above 50,000 points for the first time, and the tech-heavy Nasdaq rose 2.2 percent. Nvidia shares gained 8 percent after Chief Executive Jensen Huang said the US$660 billion in 2026 capital spending on AI announced by US tech giants is justifiable. That level of investment had raised eyebrows among investors. In other trading after a week of gyrating prices, gold, silver and Bitcoin also posted strong gains.

On Friday, the benchmark Shanghai Composite Index declined 0.25 percent, wrapping up the week with a 1.3 percent drop, and the Shenzhen Component Index retreated 2.1 for the week, with the tech-focused ChiNext dropping an even steeper 3.3 percent.

"Shares in semiconductors, artificial intelligence, new energy and telecommunications suffered strong setbacks this week, while precious metals also lost ground due to continued price declines in gold and silver, among others," said Yi Huan, chief economist at Huatai Securities.

In the China sector, chipmaker Cambricon led the downturn with slide of 17.6 percent in the past five trading days. Its peer Semiconductor Manufacturing International Corp lost 8.35 percent in Shanghai trading, and Shenzhen Kaifa Technology, which makes computer hardware and communication equipment, fell 16 percent.

Contemporary Amperex Technology (CATL), the world's largest maker of batteries for electric cars, managed a gained 5.5 percent in the week despite a 2 percent drop on Thursday.

Peter Oppenheimer, chief global equity strategist for US investment bank Goldman Sachs, told Yicai Global that Chinese stocks look attractive, with good profit prospects and market undervaluation. He also said Goldman doesn't believe there is a risky global bubble in AI investment.

Zhou Xing, a partner of consulting firm PwC, said "Chinese companies are more resilient and show more confidence toward long-term corporate growth than the global average."

PwC's latest Global CEO Survey found 67 percent of China's business leaders expressed confidence about global economic growth, compared with a global average of 61 percent.

Some 5 percent of Chinese mainland respondents said they are "very positive" about corporate income growth in the coming 12 months, lower than the global level of 31 percent. But when the timeline gets stretched to the next three years, the proportion goes up to 65 percent for Chinese mainland, higher than the global average of 49 percent.

"It indicates Chinese companies know the near-term pressures but are still confident toward the future," Zhou said.

The near-term pressures were evident in the recent competition in the AI chatbot sector. On Friday, Alibaba's shares fell 2.88 percent in Hong Kong after the tech giant launched a campaign of free bubble tea vouchers to consumers to popularize its AI assistant Qwen. The campaign ended with technical breakdown as users flooded the chatbot. Earlier in the week, rival Tencent suffered embarrassment when two of its subsidiaries clashed over AI Spring Festival holiday promotions.

Last week, Hong Kong's Hang Seng Index declined 3 percent and South Korea's Kospi lost 2.59 percent led by chipmaking giants Samsung and SK Hynix. Japan's Nikkei bucked the downward trend by rising 1.8 percent amid poll predictions of big election victory by pro-business Prime Minister Sanae Takaichi in Sunday's parliamentary elections.