China’s stock market staged a selective midday recovery on Wednesday as the ChiNext index rose 0.85% at the half‑day mark while the Shanghai Composite and Shenzhen Component posted modest gains of 0.16% and 0.76% respectively. Trading volume softened: combined turnover across the two exchanges was RMB 1.63 trillion, about RMB 216.9 billion lower than the previous trading day, underscoring a rally driven more by rotation into favourites than by a broad liquidity surge.
Sector rotation was pronounced. Precious‑metals names led the advance, with Hunan Silver registering a second consecutive limit‑up, and other gold and silver counters accelerating through the morning. Semiconductor supply‑chain stocks also extended gains: Huatian Technology, Loongson Zhongke and ZhiZheng, among more than a dozen firms, reached daily trading limits as investor interest widened beyond the largest chip names.
Lithium‑mining and processing shares staged a rebound, with companies such as Shengxin Lithium Energy and Dazhong Mining hitting their daily ceilings, reflecting renewed emphasis on raw materials critical to electric vehicle production. By contrast, domestic consumption plays showed strain; liquor and travel & hotel segments were among the weakest areas, suggesting that rotation out of reopening beneficiaries is underway. The coal sector plunged, with Dayou Energy down over 8%, highlighting uneven sectoral performance beneath the headline indices.
The market action embodies three overlapping narratives. First, investors are reallocating into commodity and deep‑tech exposure—precious metals for inflation hedging and chips for onshore tech self‑sufficiency amid continued AI demand. Second, pronounced limit‑up activity points to retail‑led momentum and concentrated bets on perceived short‑term winners rather than broad, sustained institutional support. Third, lower aggregate turnover warns that rallies may be fragile unless macro signals or policy measures bring fresh liquidity.
For international observers and portfolio managers, the episode matters because it signals where domestic risk appetite is presently concentrated. Strength in precious metals and lithium can put upward pressure on related commodity markets and influence supply‑chain economics for EVs and mining. Momentum in chip‑chain microcaps complements Beijing’s long‑running industrial strategy to reduce reliance on foreign semiconductors, but the prevalence of small‑cap limit moves raises questions about valuation stretch and sustainability.
Looking ahead, key variables to watch include whether the rally broadens beyond thematic pockets, whether onshore institutional flows start to match retail enthusiasm, and how policymakers respond if sectoral froth intensifies. With markets digesting mixed fundamentals and policy signals, episodic leadership shifts between cyclical commodities, strategic technology names and defensive assets are likely to persist in the near term.