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As tech rallies and consumer shares lag, China’s stock market forms microcosm for economy

The stock market catalogues China’s uneven growth, as manufacturing expands and consumption falls

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A large screen shows the latest stock market data in Shanghai, China, on June 15. Photo: EPA
Zhang Shidongin Shanghai
The unevenness of China’s economy is now well reflected in its US$16 trillion stock market, as technology companies ride a bull run but consumer stocks fall behind.

Artificial intelligence chipmakers, from Cambricon Technologies to Moore Threads Technology, have led a roughly 50 per cent gain in the Nasdaq-style Star Market this year, as part of the global frenzy over AI.

In stark contrast, Kweichow Moutai – considered a proxy for China’s domestic consumption – and other leading liquor producers have dropped at least 11 per cent in the same span. The CSI 300 Index benchmark has seen its consumer sector stocks fall by about 20 per cent.
The divergence illustrates asymmetric growth of the world’s second-largest economy since the start of the year, in which hi-tech manufacturing has gained traction and consumer spending has languished, amid a lack of meaningful stimulus measures by the state.
The latest official economic data showed the bifurcation had deepened; data from May added further evidence that traders are right about chasing technology stocks and abandoning consumer companies. Retail sales declined by 0.6 per cent from a year ago, the first contraction since December 2022, when China removed Covid-19 restrictions.

“China’s domestic consumption is weak, but technology remains a structural bright spot,” said Zheng Yueling, an analyst at Orient Securities.

“For the stock market, investors need to identify structural opportunities by following industry sentiment and verifying earnings. Hi-tech manufacturing and electronics chains have the upper hand, while consumer and those linked to traditional capital expenditure face restraints on earnings expectations.”

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