China's A‑share market closed the lunar year on a downbeat note as the three main indices fell throughout the trading day. The Shanghai Composite slid 1.26% to 4,082.07, the Shenzhen Component dropped 1.28% to 14,100.19, and the ChiNext index declined 1.57% to 3,275.96. Turnover across Shanghai and Shenzhen was roughly RMB1.98 trillion, reflecting thin, holiday‑affected liquidity and a market that favoured selective sector bets over broad buying.
Beneath the headline falls there was significant sector divergence. Robotics and storage‑chip related names jumped in the afternoon session: robotics supplier Dual‑Lin (双林股份) rose more than 10%, and several peers including precision‑engineering and automation companies hit daily limits. Storage and DRAM‑sensitive stocks such as Shen Technology (深科技) also rallied, while PCB (printed circuit board) materials shares retraced earlier losses and pushed some names to fresh highs.
Three news items appear to have driven sector rotation. First, the CEO of robotics firm Yushu Technology, Wang Xingxing, told state TV he expects “embodied intelligence” — physical AI systems and robots — to generate demand far beyond that of the mobile internet era if large‑scale models and robotics breakthroughs materialise. Second, Japanese semiconductor materials producer Resonac announced price increases of more than 30% for copper‑clad laminates and adhesive films used in PCBs starting March 1, a move that directly lifted domestic PCB‑materials stocks. Third, market research firm Counterpoint reported that memory prices rose 80–90% quarter‑on‑quarter into Q1 2026, driven by a sharp spike in server DRAM pricing, supporting a wave of buying in chip‑adjacent names.
Not all themes held up. CPO‑linked stocks (a grouping in A‑share parlance that includes companies tied to certain chip‑packaging or optical interconnect themes) suffered heavy losses: leading names fell double digits and several hit intraday limits to the downside. The overall pattern — pockets of speculative strength around AI and hardware supply chains versus broad market weakness — underlines investor nervousness in the thin pre‑holiday tape.
The market’s muted breadth — roughly 3,900 stocks in Shanghai, Shenzhen and Beijing finished in the red — and turnover below the RMB2 trillion threshold suggest many institutional players were standing aside ahead of the long Lunar New Year holiday. That amplifies the effect of concentrated flows: positive headlines for a single sub‑sector can produce sharp rallies, while worries about cyclicality or policy can precipitate steep selloffs elsewhere.
For international observers, today’s moves matter for two reasons. First, they reveal where Chinese investors are placing their bets ahead of the AI hardware cycle: memory suppliers, PCB materials and robotics equipment are being priced as the near‑term beneficiaries of higher server demand and possible supply shocks. Second, price adjustments by overseas suppliers like Resonac show how global supply‑chain decisions translate quickly into equity re‑ratings in China, with implications for corporate margins and for the pace of domestic capacity expansion in semiconductor materials.
Looking ahead, the market will likely remain sensitive to data on global inflation and US demand — variables that sway server and DRAM consumption — as well as to any follow‑through from Japanese and other suppliers’ price moves. The recall of investor attention toward physical AI (robots, sensors, materials) complements software‑first narratives and could lengthen the investment runway for hardware suppliers, but not without risk: valuation re‑rating can be abrupt in a thin market, and higher input prices can squeeze OEM margins if end‑market demand softens.