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Zhang Shidong

A semi-annual reshuffle of key gauges tracking China’s yuan-denominated stocks is set to boost the representation of technology companies, a move expected to lure more inflows and further increase the sector’s appeal, according to investment banks.
The shake-up was projected to spur US$3.1 billion of inflows into tech hardware and semiconductor makers, according to Goldman Sachs.
Domestic brokerages including Guosen Securities said the changes would inject more confidence into tech stocks, serving the national strategy and guiding resource allocations by underscoring the importance of the so-called new-quality productive force, a term coined by top policymakers.
The forecast came after the Shanghai Stock Exchange said it would add leading artificial intelligence chipmakers including Moore Threads Technology and MetaX Integrated Circuits to the Star Market 50 Index, a gauge of the biggest companies on the tech-heavy board, this month.
The bourse is also adding established tech companies to the Shanghai Stock Exchange 50 Index, a gauge of the 50 most valuable stocks on the main board, raising the weighting of new-economy stocks to 28 per cent.

The changes may reinforce the AI trade gaining further traction on China’s stock market, where investors are piling into technology shares as the country’s quest for tech independence drives demand for home-made products.
The Star Market 50 Index rose to a record last week, as strong first-quarter earnings and easing Middle East tensions boosted risk appetite. The gauge has climbed about 25 per cent this year, five times the gain in China’s benchmark CSI 300 Index.
Moore Threads and MetaX, coupled with Hua Hong Semiconductor, would join the Star Market 50 Index after the market close on June 12, according to the Shanghai exchange. Shengyi Technology, a maker of printed circuit boards, and Gigadevice Semiconductor would be included in the Shanghai exchange 50 index.
After the review, the Star Market 50 index will be capitalised at 5.9 trillion yuan (US$872 billion), with the coverage of the tech board’s total market value rising by about 6 percentage points to 43 per cent. Money managers at home and abroad track the index for more than 130 billion yuan of underlying fund products.
The rebalancing could signal to investors that the rally in technology stocks had more upside, supported by policy support and rosy industry sentiment on computing power, robotics and AI adoption, according to Huajin Securities. The Star Market 50 gauge tumbled 5 per cent on Monday after slumping by the same magnitude for the previous trading day, delivering signs of fatigue after its record-setting run.
“The rally in tech growth stocks isn’t over and may trend higher after the consolidation,” said Deng Lijun, an analyst at the brokerage. “China’s progress on the semiconductor industry will boost sentiment across supply chains. In addition, the strength of US stocks would also support their Chinese peers.”
The tech inflows would come at the expense of traditional industries. Healthcare could suffer the largest fund outflows, estimated at US$1.5 billion, while banks could see US$1 billion, said analysts, led by Alvin So at Goldman, in a report on Sunday. Consumer retail and staples could see outflows between US$700 million and US$800 million each, according to the report.
Among individual stocks, Hua Hong and GigaDevice were set to be among the biggest beneficiaries after their inclusions, potentially raking in between US$600 million and US$1.1 billion in fund flows, Goldman said in the report.
Index compiler China Securities Index also unveiled its biannual review of the CSI 300 Index by adding 19 stocks and removing the same number. Shengyi Tech and VeriSilicon Microelectronics will be among those to be included, while Shanxi Coking Coal Energy Group and China Oilfield Services will be dropped. The CSI 300 has risen about 5 per cent this year.


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Shanghai exchange revamp lifts tech weighting and adds chipmakers, signalling policy support and investor confidence


Shanghai exchange revamp lifts tech weighting and adds chipmakers, signalling policy support and investor confidence.


China index reshuffle to entrench tech trades and boost AI rally: brokerages

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Shanghai exchange revamp lifts tech weighting and adds chipmakers, signalling policy support and investor confidence

Shanghai exchange revamp lifts tech weighting and adds chipmakers, signalling policy support and investor confidence