Category: Fintech

Hong Kong Exchanges and Clearing has introduced the first offshore Chinese government bond futures contract, further enhancing the toolkit for global investors looking to allocate funds into Chinese yuan bonds.

The Five-Year Chinese Government Bond Futures began trading yesterday on the Hong Kong Stock Exchange, expanding the exchange’s growing portfolio of China-related financial products and complementing existing market access programs, including Bond Connect and Swap Connect.

These futures serve as a risk management instrument for yuan interest rate exposure and provide a means to participate in the yuan-denominated bond market. Investors can take long or short positions based on anticipated price movements of Chinese government bonds, with pricing and settlement conducted offshore in yuan.

“The introduction of the Five-Year Chinese Government Bond Futures strengthens Hong Kong’s offshore yuan product offerings, supports the ongoing internationalization of the currency, and solidifies Hong Kong’s role as a comprehensive platform for capital formation, trading, and risk management,” stated the chairman of HKEX.

“The integration of Bond Connect, Swap Connect, as well as our expanding derivatives, commodities, fixed-income, and currency services, is creating a more connected ecosystem, empowering investors to allocate capital, hedge risks, and explore new opportunities,” said the CEO of HKEX.

As of mid-June, foreign institutions held approximately CNY 3.2 trillion (USD 473.5 billion) worth of bonds in China’s Interbank Bond Market. About CNY 2 trillion of this was in Chinese government bonds, accounting for 63 percent of their holdings, according to data from China’s central bank.

The new futures contract allows international investors to engage in yuan interest rate pricing through the Hong Kong market. It provides a platform for reflecting diverse viewpoints on macroeconomic trends and interest rates, potentially attracting increased capital and trading activity, according to a professor at East China University of Political Science and Law.

Hong Kong’s status as the world’s largest offshore yuan market offers a convenient venue for yuan-related transactions, and its continued interaction with mainland China is expected to foster the development of a more complete yuan interest rate system, he added.

The futures contract will help improve the offshore yuan yield curve. An economist from Zhihui Group explained that it gives Hong Kong independent pricing ability for offshore yuan interest rates and enhances its influence over offshore yuan assets.

“This development signals a transition for Hong Kong from merely a settlement and financing hub to a global trading and risk management center for offshore yuan, which will strengthen its role as a vital link between mainland China and the international capital markets,” he said.

Since its launch in 2017, Bond Connect has enabled global investors to access yuan cash bonds, while Swap Connect and offshore yuan interest rate swaps have provided OTC risk management tools. Additionally, qualified foreign investors can now participate in treasury bond futures hedging on China’s financial futures exchange.

Industry insiders see the futures contract as bridging the gap in standardized, intraday-tradable risk management tools for offshore yuan, completing the ecosystem alongside Bond Connect and Swap Connect.

The introduction of Chinese government bond futures on the Hong Kong exchange marks a significant step toward closer collaboration between mainland China and Hong Kong capital markets.

During the launch ceremony, officials announced new initiatives to deepen cooperation and connectivity, including supporting mainland companies’ listings in Hong Kong, facilitating Hong Kong-listed companies’ entry into the mainland market, and expanding the range of yuan-denominated futures and exchange-traded fund products.

As a senior expert highlighted, this move aligns with the broader goal of increasing financial market integration and internationalization of China’s financial sector, featuring more seamless cross-border product and service offerings and talent exchange.

Government-backed investment institutions from Shanghai and Hong Kong signed a partnership agreement yesterday, establishing a HKD 600 million (USD 76 million) technology and innovation fund called Victoria Link Sci-Tech Fund. The fund’s focus will be on investing in Hong Kong-based tech projects and accelerating the adoption of advanced global technologies in both cities.

The primary investment areas for the fund include artificial intelligence, advanced manufacturing, new energy, as well as life sciences and healthcare. Nine projects, all incubated by universities and colleges in Hong Kong, were announced during the signing ceremony.

Shanghai’s state-owned capital investment firm is the main investor in the new fund, with Hong Kong-based Yeebo International Holdings also participating. The government of Hong Kong will contribute capital amounting to one-third of the total external investments.

The goal of the Victoria Link Sci-Tech Fund is to blend effective government guidance with a dynamic market environment. This strategy aims to mobilize additional resources to support startups in these key industries, helping them stay afloat and accelerate their commercialization, according to a representative from Hong Kong’s Innovation, Technology, and Industry Bureau.

By connecting with both domestic and international capital and utilizing industrial ecosystems, the fund will also aid Hong Kong’s tech companies in expanding into larger markets. It will help Hong Kong firms establish a full value chain—from research and incubation to funding and industrial development.

The fund will leverage Hong Kong’s position as a global innovation hub to attract top overseas scientific resources and talent, while also assisting Shanghai’s advanced tech companies in raising capital internationally. It plans to host project showcases, industry-research matchmaking events, and innovation exchanges across both cities, aiming to turn short-term collaborations into lasting, systematic partnerships.

Hong Kong launched a HKD 2 billion (USD 255 million) Science and Technology Innovation Venture Capital Fund in 2017, designed to boost venture capital investments in local startups. In 2024, an adjustment to this plan allocated HKD 1.5 billion to create co-investment funds with external partners, focusing on strategic industry startups. The Hong Kong government participates as a limited partner, investing HKD 1 for every HKD 3 raised from private investors.

This new Victoria Link Sci-Tech Fund is the first in its category to complete external funding and is also the first Hong Kong dollar-denominated fund established through a market-based approach. Managed by Shanghai’s state-owned capital investment firm, which oversees 37 funds with nearly CNY 300 billion (USD 44.4 billion) in assets, the fund will help foster innovation and support high-growth tech companies.

Since last year, nearly 20 tech firms that received early-stage funding from Shanghai’s government-backed investment have successfully listed on the Hong Kong Stock Exchange, including Biren Technology, Lightelligence, and MiniMax.

China’s leading producer of optical transceivers and interconnect solutions, sank below its initial offering price on its first day of trading in Hong Kong after raising approximately HKD 53.4 billion (USD 6.8 billion) in the city’s largest listing in nearly seven years.

Shares ended the day 2% lower at HKD 960 (USD 122.38) each, compared to the HKD 980 offer price. Amid a selloff in Chinese mainland equities and a broader retreat from global technology stocks, its Shenzhen-listed stock closed down 9.2% at CNY 864 (USD 127.83), after falling as much as 16.6% to CNY 793.03, marking the lowest point since April 16.

The company’s robust rally earlier this year in Shenzhen is also a key reason for its decline in Hong Kong. Driven by soaring demand for its products and rapid earnings growth, it peaked at CNY 1,416.88 (USD 209.45) on June 22 but has since fallen by about one-third. Despite this, as of July 29 closing, the shares are still up roughly 56% year-to-date and approximately 353% over the past 12 months.

The company sold 54.5 million Hong Kong shares, with the offering price offering nearly a 3% discount to the upper marketed limit of HKD 1,010 and roughly a 21% discount compared to its July 27 closing price in Shenzhen.

This notable secondary listing, the largest in Hong Kong since Alibaba’s in November 2019, attracted many high-profile cornerstone investors, including Temasek, Abu Dhabi Investment Authority, CPP Investments, BlackRock, J.P. Morgan Asset Management, Wellington Management, Alibaba, and Tencent Holdings.

Following the significant price correction since late June, the company announced plans to buy back shares from its Shenzhen listing, with a target range of CNY 4 billion to CNY 8 billion (USD 591.2 million to USD 1.2 billion). Share buybacks are often used to support a stock’s price by reducing the number of shares available in the market.

“The initiation of the share repurchase scheme appears closely linked to the Hong Kong listing,” said an analyst from Everbright Securities International. “Innolight aims to halt the decline in Shenzhen’s share price to bolster confidence among Hong Kong investors and support the company’s post-listing performance there.”

Proceeds from the Hong Kong offering will mainly be allocated to research and development of optical interconnect solutions (35%), expanding its capacity to produce high-speed optical transceivers globally (30%), acquisitions and investments within its supply chain (15%), strengthening supply chain resilience (10%), with the remainder allocated to working capital, according to the company’s prospectus.

Driven by rising demand for artificial intelligence computing, the global optical module market is experiencing unprecedented growth. The market for optical modules in data centers is projected to reach USD 22.8 billion this year and grow to USD 41.4 billion by 2030, according to U.S.-based market research and data analysis firm LightCounting.

Cross-border fund inflows and outflows within the Shanghai Pilot Free Trade Zone’s program for upgrading corporate free trade accounts have now surpassed 133 billion yuan (approximately $19.7 billion). This month, the first digital yuan transfer was successfully completed as part of the initiative.

The key achievement of this pilot is enabling seamless fund transactions between free trade accounts and international accounts. This milestone was highlighted at a recent press conference by Shi Jiandong, deputy director of the macro prudential management department at the People’s Bank of China’s Shanghai branch. He emphasized that this development signifies a major step by the central bank toward expanding the institutional framework for cross-border capital flows and testing the potential for capital account convertibility within the zone.

Free trade accounts, introduced as a flexible channel for companies with international business needs, serve as a transitional medium between overseas trading partners and domestic accounts. Launched on December 5th, the pilot aims to evaluate the feasibility of allowing direct receipt and disbursement of funds between these free trade accounts and overseas accounts, while funds deposited into regular domestic accounts are still subject to existing foreign exchange regulations.

Enhancements to these free trade accounts now allow for cross-border transfers based on firms’ payment instructions, significantly easing trade, investment, and financing activities across borders. Participation in this pilot includes eleven banks and forty-two quality firms across sectors such as automotive, modern agriculture, and semiconductors, including major state-owned enterprises, foreign companies, and private firms.

The scope of the program has expanded from traditional commodity trade to encompass services, offshore arrangements, processing trade, as well as capital-driven activities like cross-border financing and overseas lending. This broadening helps meet the diverse financial service needs of different business types.

For the first time, a participating bank processed a cross-border freight payment using digital yuan via a digital currency bridge, addressing the need for more efficient and secure fund transfers for companies involved in international trade.

Overall, Shanghai is leveraging this pilot to explore the secure and manageable free flow of cross-border funds through free trade accounts, fostering institutional reforms in cross-border capital movement, stress-testing the convertibility of the capital account, and supporting the city’s ambitions to become a global financial hub and international trade center. These initiatives also aim to produce replicable experiences to support a higher level of financial openness nationwide.

China’s leading investment bank has appointed Miao Yanliang as its new chief economist. Miao, who previously served as an economist at the International Monetary Fund and worked with China’s foreign exchange regulator, will take over the role from Peng Wensheng, who has reached retirement age.

Prior to joining the bank in 2023, where he also serves as the chief strategist, Miao spent ten years at the State Administration of Foreign Exchange. His focus was on macroeconomics and foreign exchange market research, after earlier working at the IMF in Washington.

While at the IMF from 2008 to 2013, Miao contributed to emerging markets and debt policy teams, and participated in efforts related to the European sovereign debt crisis.

His tenure at the foreign exchange authority from 2013 to 2023 saw him serve as a senior advisor to the director-general and lead researcher at the Central Foreign Exchange Business Center. His work involved conducting global economic and strategic analyses to support reserve management. In 2018, he was appointed the organization’s chief economist.

Earlier in his career, Miao was a visiting scholar and special assistant to Stanley Fischer, then governor of the Bank of Israel, focusing on monetary policy and central bank structure. He also held a teaching position in economics at Princeton University’s Woodrow Wilson School of Public and International Affairs.

Individual income tax revenue experienced sustained double-digit growth in the first half of the year, surpassing consumption tax revenue for the first time in four years to become China’s third-largest tax revenue source.

Revenue from individual income tax increased by 13 percent, reaching CNY898.2 billion (approximately USD132.7 billion) during the six months ending June 30, compared to the previous year. This growth was fueled by active capital markets, higher earnings in thriving sectors, and more aggressive collection efforts targeting high-income groups, according to officials at the national tax agency.

Meanwhile, domestic consumption tax collections declined by 3.4 percent to CNY867.3 billion over the same period.

Wang Shiyu, chief auditor, highlighted that taxes on personal investments—particularly equity transfers and dividends—accounted for nearly half of the growth in individual income tax revenue. Revenue from restricted stock transfers nearly doubled year-over-year, and income from interest, dividends, and bonuses increased by over 15 percent.

Strong performance in specific industries contributed to higher incomes and increased tax payments. For instance, taxes paid by professionals in scientific research and technical services rose 15 percent, while those from employees in non-ferrous metal smelting and processing surged 41 percent.

Enhanced enforcement of tax compliance among high-income earners also played a role, resulting in an additional CNY34 billion (about USD5 billion) collected through efforts to recover overdue taxes and late payment penalties during the first half of the year.

Beyond fiscal contributions, individual income tax functions as a key tool for income redistribution. Over 200 million taxpayers filed annual tax settlement declarations last year, with more than 70 percent owing no extra tax after deductions. Generally, taxpayers earning less than CNY120,000 (around USD17,730) paid little or no tax, thanks to available deductions.

Additionally, over 60 percent of taxpayers with taxable income were within the lowest 3 percent tax bracket, underscoring the system’s role in supporting low-income groups while imposing higher taxes on wealthier earners.

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On July 28, a leading domestic flash memory chip designer made its debut on Shanghai’s Nasdaq-style Star Market, setting multiple records in the process. The company became the most valuable listed entity in Mainland China, surpassing previous records.

Trading turnover on its first day exceeded 1.41 trillion yuan (approximately 208.6 billion USD), surpassing the 1 trillion yuan mark within just one hour, making it the first company on the Mainland to record a daily turnover over one trillion yuan. The trading volume had a turnover rate of 66.4%.

For its initial public offering, the company issued roughly 6.69 billion shares at a price of 8.66 yuan (about 1.27 USD) per share. The gross proceeds before the greenshoe option was exercised reached 57.9 billion yuan (around 8.6 billion USD), topping the previous record set by a semiconductor company’s IPO in 2020, and became the largest IPO in China since 2004, as well as the biggest in Asia this year.

The company’s stock soared 466% to close at 49 yuan (approximately 7.24 USD) per share on its first day and was trading slightly lower at 48.20 yuan (around 7.12 USD) during midday trading today. With a market capitalization of approximately 3.28 trillion yuan (about 486 billion USD), it surpassed other major firms, including a prominent chipmaker valued at 1.23 trillion yuan and a leading bank valued at roughly 2.76 trillion yuan, ultimately becoming China’s most valuable publicly listed company.

On a global scale, the firm’s market value exceeded that of a major American chip manufacturer, closing at around 462.4 billion USD. This marked the first time a Mainland Chinese technology company had a valuation higher than many of its international peers. At its highest valuation during the day, it briefly surpassed a well-known Chinese tech company, Tencent.

The company’s market capitalization now accounts for nearly 18% of the entire Star Market’s total valuation, which is about 18.48 trillion yuan (roughly 2.73 trillion USD), and roughly 2% of all listed companies in Mainland China. It holds the largest weighting in the market’s index history.

In the first quarter, the company commanded about 8% of global DRAM sales, ranking fourth worldwide after industry giants. During that period, it posted revenue of 50.8 billion yuan (roughly 7.54 billion USD), up an extraordinary 719% from the previous year. Its net profit for the first quarter reached 24.8 billion yuan (about 3.68 billion USD), more than 13 times higher than the same period in the previous year.

Looking ahead, the company forecasts that its revenue for the first half of the year will jump between 613% and 713%, reaching roughly 110-120 billion yuan. Net profit is expected to increase dramatically, potentially between 2,544% and 2,744%, reaching between 50 and 57 billion yuan.

The company explained that rising global demand for computing power and reallocation by major industry players has caused supply shortages across DRAM products, pushing up prices. Its ongoing increase in production capacity, along with product optimization, has driven rapid revenue growth.

As the sole domestic manufacturer capable of large-scale DRAM production, the company’s listing marks a significant milestone for China’s semiconductor industry. It challenges the nearly three-decade-old global oligopoly that has dominated DRAM manufacturing.

Following its listing, the company plans to accelerate large-scale investment in domestic semiconductor equipment and materials. Its expansion will enhance collaborations between upstream packaging and testing vendors, downstream memory module makers, and domestic wafer fabrication plants, further strengthening China’s integrated circuit ecosystem and elevating its chip development to new levels.

Shares of the Chinese battery manufacturer experienced a notable increase after announcing plans for a share buyback program, which is poised to become the largest in mainland China. The company’s stock in Shenzhen jumped 4.4%, closing at CNY400 (approximately USD59.09).

The company intends to repurchase shares at a maximum price of CNY573 each, with a buyback total ranging from CNY20 billion to CNY40 billion (roughly USD3 billion to USD5.9 billion). An official filing from July 24 indicated that the current stock price is nearly 50% above the closing price on the day of the announcement.

The management explained that despite improvements in development, finance, profitability, and market standing, the stock remains undervalued amid market volatility. The buyback is not part of a regular schedule but will be executed when deemed appropriate, considering regulatory guidelines and financial capabilities.

On July 24, the company also disclosed its financial results for the first half of the year. Revenue soared by 55% to CNY276.9 billion (about USD40.9 billion), while net profit increased 42% to CNY43.3 billion.

Revenues from the energy storage and power battery systems segment rose 46% to CNY192.1 billion over the six months ending June 30, representing more than 69% of the total revenue.

According to SNE Research, the company’s share of the global battery market by usage exceeded 40% during the first five months of the year, up from 38% a year earlier.

Energy storage emerged as the fastest-growing division, with related revenue climbing 88% to CNY53.3 billion in the first half, comprising over 19% of total revenue, up from nearly 15% in the previous year.

Most of this segment’s revenue is generated domestically, with the rest coming from international markets. Company executives indicated plans for gradual expansion abroad, especially as electric vehicle adoption increases outside of China.

The company’s battery system production capacity reached 525 GWh as of June 30, with an additional 764 GWh under construction. Capacity utilization during the first half was nearly 95%.

Investments are also being made into artificial intelligence data center energy solutions. The surging demand for AI computing power has accelerated infrastructure development, which demands specialized and robust energy supply systems. Executives highlighted this as a significant market opportunity for the company.

Having a fiscal self-sufficiency rate below 100% is a common occurrence among local governments across the United States, according to the deputy director of the finance department’s budget office. The fiscal self-sufficiency rate measures the percentage of general revenue that covers expenditures, explained at a recent press conference. Local governments often fund their expenses not only through their own revenue but also via support from higher levels of government and management of state-owned assets. Therefore, a shortfall in revenue doesn’t necessarily mean they can’t balance income and spending.

The federal government continues to increase transfer payments to state and local entities, which plays a crucial role in closing the financial gap at the local level.

Across the country, the average fiscal self-sufficiency rate was approximately 50% in 2025, down from 55% in 2015. More economically developed areas, such as major metropolitan regions, typically have rates exceeding 70%, while less developed regions, like several rural counties, often fall below 20%.

In 2024, over 2,700 county governments had an average self-sufficiency rate of around 38%, with some as low as 1% and others as high as over 250%, according to a report from a leading university’s school of public finance.

In the U.S., tax revenue is shared between federal, state, and local governments. A significant portion of the taxes collected in a city must often be transferred to higher levels of government. For example, last year, federal general revenue accounted for about 44% of the national total, while local governments used only 15% of their expenditures from local revenues. The remaining funds were redistributed through annual transfer payments totaling over $1 trillion.

To promote greater financial independence at the local level, the government has emphasized the importance of optimizing transfer structures, improving management, and increasing coordination to better respond to local needs.

One approach being considered is pilot programs to better coordinate transfer payments to mitigate the decline in local land-based revenues, reduce regional disparities, and ensure stability in basic services. Experts suggest increasing equalization payments and empowering provincial authorities to allocate these funds more effectively.

Further, exploring the potential to shift some revenue-generating powers, such as certain consumption taxes, to local governments could enhance their financial control. Improving the scope and design of tax systems remains a priority.

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China has taken a significant step forward in its market-oriented lending rate reforms as branches of major banks, including the Industrial and Commercial Bank of China, China Merchants Bank, and Shanghai Pudong Development Bank, issued their first loans tied to the Depository Institutions Repurchase Rate (DR) in the southern Hainan province. This development introduces a new benchmark for setting lending rates across the country.

The DR rates, published daily by the China Money Network, encompass various maturities such as overnight (DR001), seven-day (DR007), and 14-day (DR014). Given their higher liquidity, shorter-term DR rates are expected to become the preferred benchmarks for both lenders and borrowers when determining loan pricing.

This move marks a key milestone in the country’s efforts to liberalize interest rates, representing a shift toward using DR—an interbank money market benchmark—as a primary reference point for credit market pricing. While the Loan Prime Rate (LPR) continues to influence borrowing costs to some extent due to regulatory guidance, DR rates more directly reflect actual market conditions, including the supply and demand for funds and overall liquidity.

“Linking loans to DR benchmarks allows lending rates to more accurately mirror the costs of market funding,” explained a finance expert.

The introduction of these benchmarks by leading banks breaks the recent reliance solely on the LPR, fostering a more diversified and transparent interest rate system and improving flexibility in how loan prices are set. This innovation could also help banks enhance their asset-liability management and risk assessment capabilities, reducing the potential mismatches that can occur when policy rates are adjusted with a lag.

Encouraged by the financial innovation policies within the Hainan Free Trade Port, market participants are exploring ways to align the DR benchmark with internationally recognized money market standards such as SOFR. Such alignment could support cross-border business activities by facilitating integrated onshore-offshore financing and more effective interest rate risk management.

China Merchants Bank highlighted that their first DR-linked loan allows clients to benefit from the rapid reflection of interbank rate movements, giving them the flexibility to choose loan benchmarks that suit their financing needs and expectations about future rate trends.

Many companies listed in China project a decline in their earnings for the first half of the year, primarily due to foreign exchange losses resulting from the rising value of the Chinese yuan against the US dollar and the euro.

Approximately 130 firms on the Chinese mainland reported foreign exchange losses in their earnings forecasts for the first six months, according to recent data. Numerous exporters anticipate increased revenue but no significant profit growth, as the yuan’s appreciation offsets their gains.

For instance, Linglong Tire anticipates an 87% drop in net profit, totaling around 110 million yuan (approximately $16.2 million), compared to last year. The decline is mainly attributed to foreign exchange losses triggered by fluctuations in exchange rates.

Confronted with the challenges posed by volatile exchange rates, businesses are becoming more proactive in managing currency risk, according to a senior official from the State Administration of Foreign Exchange.

In this environment, demand for safe-haven assets has surged. Chinese companies’ contracted sales using foreign exchange derivatives increased by 40% year-over-year, reaching $1.4 billion in the first half. Their currency hedging ratio also climbed from 30% to 35%, and cross-border trade settlements denominated in yuan accounted for roughly 30% in the first five months of the year.

While it has long been understood that tools such as forward contracts and options can help companies lock in exchange rates, a growing number of publicly listed firms are still experiencing foreign exchange losses despite increasing their hedging measures.

Hedging instruments can only partially mitigate exposure to currency risk, explained Zhao Qingming, vice president of a research institute focused on technology. Even with a comprehensive hedging system, completely eliminating exchange rate risk remains impossible.

He emphasized that companies need to continually improve their risk management strategies, focusing on controlling exposure rather than reacting solely to exchange rate fluctuations.

As Chinese firms expand their presence globally, the focus of currency risk management is expected to shift from simple derivative-based hedging to broader approaches such as matching assets and liabilities in the same currency and naturally offsetting revenues and expenses, according to an industry economist.

Since its inception seven years ago, the tech-focused board on the Shanghai Stock Exchange has seen 611 companies go public, collectively raising over 1.2 trillion yuan (approximately $177.1 billion USD). As of yesterday, the total market value of these listed firms exceeds 13 trillion yuan (around $1.91 trillion USD).

Over this period, companies listed on the tech board have dedicated nearly 900 billion yuan (about $132.9 billion USD) to research and development. In the last three years, their median R&D investment intensity has reached nearly 13%, ranking first among the four main boards across mainland China.

By comparison, the median R&D investment intensity for companies on the main board of the Shanghai Stock Exchange is 3.4%, while the Shenzhen Stock Exchange’s main board shows 3.7%, and the ChiNext tech board registers 5.4%.

The adoption of a registration-based IPO system on this tech-focused exchange has made it easier for high-tech companies to access the public markets, according to several executives of listed firms. The flexible and supportive policies have bolstered capital operations and innovative growth, enabling companies to concentrate on expanding core businesses, upgrading technologies, and broadening their market reach.

For instance, the chairman of Jansen Superconducting Technologies explained that their research and development goals remained unchanged since they went public, but the influx of capital from the IPO has sped up their R&D efforts. Post-IPO, they have gained a competitive edge in attracting specialized talent, and rising orders have helped them increase production capacity.

Suzhou HYC Technology, the first company listed on this tech board, has used proceeds from their IPO and convertible bonds to advance display semiconductor technology, significantly boosting their technological capabilities and easing production bottlenecks, according to the company’s deputy general manager and CFO. Employee stock ownership plans and equity incentives have also played key roles in attracting top talent.

Over the past seven years, the star board has mainly concentrated on fostering industrial ecosystems in sectors like integrated circuits, biomedicine, artificial intelligence, and high-end manufacturing. These sectors, particularly IC, biomedicine, and high-end equipment manufacturing, comprise over 80% of listed companies.

The industrial clusters within information technology, biomedicine, and high-end equipment manufacturing have established notable influence globally, especially in mature markets where they set supply and pricing standards. Some leading firms in niche segments compete closely with or even slightly outperform their international counterparts.

However, certain upstream materials and critical components still lag behind, with Chinese firms positioned in the second or third tier but actively working to catch up, an industry insider remarked.

In terms of regulatory reforms, recent measures introduced on June 17 aim to broaden the scope of listing criteria to include artificial intelligence. This change encourages the listing of high-quality AI model developers and supports the entrance of more advanced tech firms in areas such as quantum computing, biomanufacturing, and embodied intelligence.

Some companies, including Zhipu AI (also known as Z.ai internationally) and MiniMax Group, are progressing toward a return to the Chinese mainland for initial public offerings.

This expansion effectively redefines large language models from mere technical tools to vital components of new infrastructure, with their own independent ecosystems. It also creates new financing opportunities for AI developers with core technologies who have yet to turn a profit, according to industry analysts.

China’s stock markets experienced a significant rebound today following numerous public companies announcing plans to increase shareholder stakes or repurchase shares. These moves come after two major state-owned capital operation firms revealed they invested around CNY60 billion (approximately USD8.9 billion) to stabilize the market.

The Shanghai Composite Index rose by 1.8%, closing at 3,864.37 points, while the Shenzhen Component Index surged 4.8% to finish at 14,264.29 points. Meanwhile, the Nasdaq-style ChiNext and the Star Market indexes jumped 7.1% and 8.8%, reaching 3,685.97 and 2,060.48 points, respectively.

Yesterday, about ten companies listed in mainland China announced plans to increase shareholder holdings. Notably, China State Construction Engineering disclosed that its controlling shareholder plans to invest between CNY500 million (around USD73.9 million) and CNY1 billion over the next year to buy more shares.

EVE Energy’s CEO and director, Liu Jianhua, intends to purchase an additional 100,000 shares within six months. Based on the company’s latest stock price, this transaction could be valued at over CNY5 million (roughly USD738,980).

Additionally, 30 more firms revealed preliminary share buyback plans or proposals. For instance, Huayou Cobalt aims to repurchase shares worth between CNY600 million (approximate USD88.6 million) and CNY1 billion, while Three-Circle Group, an electronic components and materials provider, announced a buyback plan ranging from CNY450 million to CNY900 million.

To invigorate the currently sluggish stock market, China Reform Holdings and China Chengtong Holdings Group—both under the authority of the State-Owned Assets Supervision and Administration Commission—announced investments of roughly CNY50 billion (about USD7.4 billion) and CNY10 billion, respectively, to acquire more shares in state-owned listed companies.

This led several other state-owned enterprises, such as China Three Gorges Renewables Group and Aluminum Corporation of China, to declare shareholding increase plans yesterday morning.

Last week, the Shanghai Composite Index dropped 5.8%, and the Shenzhen Component Index fell 8.9%. The ChiNext and Star Market indexes declined by 10.8% and 17.5%, respectively, marking their most substantial weekly losses this year.

The four main stock exchanges in mainland China experienced a mixed closing, with some indices edging higher while others declined. A prominent investment firm highlighted that the recent market correction suggests excessive pessimism and suggested that a second buying opportunity of the year might be approaching.

Today, the Shanghai Composite Index increased by 0.9%, whereas the Shenzhen Component Index dropped by 0.7%, both remaining below their levels at the year’s start. The ChiNext Index advanced by 0.4%, but the Star Composite Index fell by 2.3%.

Following the recent pullback, Chinese asset valuations have become comparatively low relative to major global markets, making these assets appear increasingly appealing as the revaluation process intensifies, according to a research report from a leading investment bank.

Trading activity on the combined Shanghai and Shenzhen markets reached about CNY2.7 trillion (roughly USD399 billion), a rise of CNY47.2 billion (approximately USD7 billion) from the previous day. Over 3,700 of the more than 5,500 listed stocks declined in value, with more than 200 hitting their daily trading limit.

Stocks in the power and coal sectors led gains, with many reaching their daily maximum limits. Shares in liquor, oil and gas, banking, insurance, and brokerage sectors also outperformed. Conversely, the hardware supply chain sectors, including printed circuit boards, lithography equipment, and co-packaged optics, experienced heavy selling. Photovoltaics, robotics, aerospace, and lithium battery stocks also saw sharp declines.

The report attributed the recent market downturn to a mix of international and domestic factors. These include a decline in sentiment toward the global AI sector since late last month, a significant drop in South Korea’s stock market amid deleveraging efforts, renewed geopolitical tensions, and a correction in technology stocks.

The firm also noted that trading volumes for mainland-listed stocks surged between mid-May and late June, with turnover rates surpassing 5% of free-float market cap on several days, indicating overheated activity.

The decline intensified between July 15 and 17, with the Shanghai Composite reaching its lowest point of the year. On July 17, both the ChiNext and Star 50 indices fell more than 7% in a single day, marking their third-largest and largest monthly percentage drops on record, respectively.

In response, state-backed investment funds, often referred to as the “national team,” injected about CNY60 billion (approximately USD8.9 billion) into shares of state-owned enterprises to support the market. These entities, comprising China Reform Holdings, China Chengtong Holdings Group, and Central Huijin Investment, are known for stepping into the market during downturns to stabilize prices and maintain investor confidence.

Recently, China Reform and its affiliates invested over CNY50 billion through special credit facilities to repurchase shares and increase holdings, including matching capital. China Chengtong indicated that it and its associated investment vehicles spent nearly CNY10 billion and will continue to add to their holdings in central state-owned enterprises, tech firms, and ETFs. Several companies have also announced plans to buy back their own shares.

Looking forward, the firm anticipates that upcoming first-half earnings reports, due next month, will provide fundamental support to the market. In its mid-year outlook released in June, the firm projected a 6.3% profit growth for A-share companies and 9.9% for non-financial firms in 2026, marking the highest growth rates since 2022.