China AI: Is It Time to Scale Up?... STAR Market Net Profits Soar 437% [Click eMarket]

STAR Market Net Profits Surge 437%
AI Infrastructure Expansion Across the Board

While China's economic recovery remains sluggish, analysts in the securities industry note that there are still valid medium- and long-term investment opportunities in the Chinese market, particularly focused on advanced industries such as artificial intelligence (AI) and semiconductors.

According to Mirae Asset Securities as of September 3, researcher Park Sujin commented the previous day, "China's economic recovery is still limited, but strong growth is continuing, especially on the STAR Market (Ke Chuang Ban), buoyed by the expansion of AI demand and the domestic production of semiconductors."

'Xin Xin San Yang' Emerges... Profits in Advanced Manufacturing Surge 105%

China's growth in high-tech industries centered around AI and semiconductors is clear. In the period from January to July this year, profits in the computer, telecommunications, and electronics equipment manufacturing sectors soared by 105% compared to the same period last year, substantially outperforming the overall profit growth rate of 17.6% among all industrial enterprises during the same timeframe.

Shifts in China’s export structure are also being observed. In the past, electric vehicles, batteries, and solar energy, known as 'Xin San Yang,' drove export growth. More recently, AI hardware, robotics, and innovative pharmaceuticals, referred to as 'Xin Xin San Yang,' have emerged as new growth engines. The combination of rising global AI demand and the advancement of domestic semiconductor self-sufficiency has significantly boosted earnings momentum across technology stocks.

As a result, in the first half of this year, STAR Market-listed companies reported total sales of 1.01 trillion yuan (a 38.6% increase year-on-year), with net profits reaching 144.89 billion yuan (a 437.6% increase). Net profits for the first half of 2026 have already surpassed the total net profit for the entire previous year.

Notably, net profits within the integrated circuit value chain on the Shanghai Stock Exchange surged by 660% year-on-year. This growth came as leading AI chip companies such as Hygon and Cambricon experienced substantial sales increases, CXMT achieved a significant turnaround into profitability, and both SMIC and Hua Hong Semiconductor recorded their highest-ever quarterly revenues.

Park emphasized, "The expansion of AI chip and memory production is resulting in improved performance across the entire AI infrastructure value chain, including foundries, equipment, materials, servers, and optical communications."

Short-Term Volatility Warning... "Approach Should Focus on Semiconductors and Infrastructure"

Short-term valuation pressure and increased volatility due to rising stock prices are risk factors that should be monitored. The STAR 50 Index has recently given up part of its previous gains from its peak. Nevertheless, as of now, it has posted a 25.3% increase since the start of the year, maintaining robust growth among major Chinese indices. Continued strong capital inflows into related exchange-traded funds (ETFs) confirm substantial investor interest.

Park noted, "The medium- to long-term outlook for China's AI industry remains positive, but going forward, it will become increasingly important to select companies backed by real earnings rather than simple thematic investments."

He added, "While maintaining the broad investment direction in China's AI sector, for the time being, strategies that focus on semiconductors and AI infrastructure, where earnings visibility is high, are more effective."

This content was produced with the assistance of AI translation services.