Chinese equities rallied to new multi-year peaks on Tuesday, underpinned by robust advances in artificial intelligence and fresh indications of economic recovery.
The CSI 300 Index soared as much as 1.22% to 4,775 points, touching its highest point in four years. Meanwhile, the Shanghai Composite Index gained 1.16% to 4,070 points, marking its most elevated close since mid-2015. Technology and materials stocks were among the primary drivers of the day’s momentum. The CSI 300 recorded a 24% gain in 2025, while the Shanghai Composite surged about 25%.
A buoyant manufacturing sector, coupled with President Xi Jinping’s favorable outlook on the economy and continued strength in AI-related stocks, has fueled investor confidence as 2026 begins. Many market participants anticipate that the momentum making Chinese stocks global outperformers in the previous year will persist. This optimism is supported by Beijing’s ongoing support for key industries and a series of measures aimed at revitalizing the property sector.
On Monday, trading turnover in mainland China hit 2.5 trillion yuan (US$364.6 billion), the highest since mid-October, as margin loans used by investors remained near record highs.
However, technical indicators suggest the rally may soon overheat as the Shanghai Composite’s 14-day relative strength index (RSI) surged above 74. The CSI 300’s RSI is also nearing this threshold.
Investor enthusiasm for China’s AI sector has continued to accelerate since early 2025, following the emergence of DeepSeek—an innovation that upended the tech landscape by significantly lowering output costs compared to ChatGPT at the time.
