China’s markets have entered a period of restless momentum. Small industrial metals such as tungsten have ripped higher—prices have risen more than fourfold over the past year—while domestic equity funds have mostly rode a post‑Lunar‑New‑Year rebound: nearly nine in ten active equity funds showed year‑to‑date gains as retail and institutional money returned to A‑shares.
The price spike in tungsten is emblematic of a broader squeeze in speciality metals. Tungsten is widely used in high‑end manufacturing, defence and industrial tooling; its rally reflects a mix of stronger demand from advanced manufacturing, supply concentration and speculative flows that have found fresh life amid AI and robotics narratives. Producers and listed suppliers are enjoying windfall gains, but companies and regulators are warning that the surge raises profitability volatility and cost‑pass‑through risks if prices correct.
At the same time, the People’s Bank of China made a notable policy move: it cut the foreign‑exchange risk reserve requirement on forward foreign‑exchange sales from 20% to zero with effect from March 2. The step reduces the regulatory cost of corporate hedging and signals an intent to smooth exchange‑rate frictions while allowing the renminbi to continue a managed two‑way float. For exporters and firms with foreign‑currency exposures the change lowers hedging costs; for markets it is a conciliatory gesture aimed at easing abrupt currency moves rather than an outright loosening of macro policy.
Global headlines have complicated the outlook. A flare‑up in the Middle East—marked by US and Israeli strikes on Iran and subsequent Iranian reprisals—has pushed oil, gold and silver higher, stoking fears of widening supply disruption. Chinese brokers and asset managers have convened emergency calls to assess contagion into risky assets; short‑term volatility in energy and precious metals threatens to spill into manufacturing input prices and investor sentiment.
Investors are also wrestling with a reassessment of the AI boom. US equity flows swung between exuberant buying and a rapid unwind: the January narrative of “AI as a limitless profit engine” met a February period of near‑panic selling as markets questioned near‑term monetisation and return horizons. The 13F filings for the fourth quarter revealed divergent strategies among global asset managers—some cutting exposure to mega‑cap tech, others doubling down—underscoring a bifurcated market that will likely produce wider sector dispersion.
Meanwhile, China’s robotics and humanoid‑robot sector is moving from demo‑days to capitalisation. Several companies announced sizeable funding rounds, and consumer tech firms are experimenting with embodied AI devices such as robot phones. The trend is accelerating real‑economy adoption of automation and supports demand for components from sensors to storage chips, but rapid fundraising also risks inflating valuations ahead of demonstrable revenue growth.
Domestic market micro‑risks are visible in episodes of extreme trading. One listed company posted seven consecutive daily limit‑ups and disclosed that its share price had diverged sharply from fundamentals, prompting a possible trading suspension and reinforcing regulators’ unease with speculative excess. Taken together, the commodity rally, fund performance, FX easing and geopolitical shocks point to a market buoyed yet brittle: policy will try to steady the boat, but swings in prices and sentiment are likely to persist.