Mainland China investors have been closely monitoring the performance of U.S. stocks, while expressing disappointment in the lackluster performance of stocks at home. Despite macroeconomic differences and the absence of Chinese stocks experiencing significant price jumps like Nvidia, there are still notable performers in the Chinese stock market. One such example is Apple supplier Foxconn Industrial Internet, which saw an impressive 81% surge in the first six months of the year. Analysts at Bank of America Securities have a buy rating on Foxconn Industrial Internet, citing its key role as an iPhone casing supplier and anticipating strong casing sales to support margins and earnings. With expectations of a better iPhone shipment cycle in the coming years, the future looks promising for Foxconn Industrial Internet.
Avary Holding: Riding the Wave of Artificial Intelligence Demand
In the second spot for top performers in the CSI 300 is Shenzhen-listed Avary Holding, which also surged by nearly 81% in the first half of the year. The company has attracted significant interest from foreign institutional shareholders, including Standard Chartered Bank, HSBC, and JPMorgan. Huatai analysts foresee Avary Holding benefiting from the growing demand for artificial intelligence in mobile phones and PCs. Positioned strongly in high-end technology fields such as high-density interconnect circuit boards, Avary Holding is well-placed to capitalize on industry trends. The company’s expansion into new domains like automobiles and servers further solidifies its potential for growth and market leadership.
Zhongji Innolight: Leveraging Optical Communication Market Trends
Zhongji Innolight secured the third position in the CSI 300 performance rankings for the first half of the year with a 70% increase. Nomura analysts have given Zhongji Innolight a buy rating, emphasizing the company’s stronghold in the global optical communication market. With a focus on generative AI training and inference, Zhongji Innolight is set to benefit from the rising infrastructure demand driven by artificial intelligence. The company’s technological expertise, strong execution capabilities, and strategic partnerships position it as a key player in the global optical transceiver market. Analysts are confident in Zhongji Innolight’s ability to maintain its leading position and capitalize on future market opportunities.
Despite the notable performances of individual stocks, the CSI 300 index as a whole has experienced a slight downturn year-to-date. Factors such as slower economic growth and uncertainty about future earnings have contributed to the overall underperformance of the mainland China stock market. In contrast, the Nasdaq Composite in the U.S. posted a significant 18% gain in the first half of the year, highlighting the disparity in market performance between the two countries. Wanda Wang, a research manager at Morningstar, notes that the mainland China stock market has struggled to outperform in the past two years, leading to increased investments in index-tracking ETFs by institutional investors.
Capital controls and regulatory restrictions limit the access of many mainland China investors to overseas markets. However, financial institutions have introduced ways for investors to indirectly participate in international trends. For instance, Invesco’s jointly managed ETF with Great Wall that tracks the Nasdaq has attracted significant buying interest, leading to a premium of over 10% to its net asset value. The Shenzhen Stock Exchange has had to intermittently suspend trading of the ETF due to overwhelming demand, underscoring the growing interest of mainland China investors in accessing overseas investment opportunities. Despite challenges in directly accessing international markets, institutional investors are finding innovative ways to tap into global investment trends.