China's Tech Stocks Surge: Policy Tailwinds and Valuation Re-Rating Converge

Policy-Driven Momentum Meets Valuation Recovery: Unpacking the Deep Logic Behind China’s Tech Stocks’ Collective Surge

At noon on June 29, China’s capital markets witnessed a rare “dual-tech strength” phenomenon: the Hang Seng Tech Index surged over 4% in a single day—its highest level in two years—while the STAR 50 Index (A-share tech index) closed at 2063.94 points, breaching the 2060-point threshold for the first time and setting a new all-time high. This synchronized breakthrough was no random event; rather, it reflected a precise confluence of four forces—policy signals, industrial progress, fund behavior, and valuation cycles—at a critical inflection point. Underlying this surge lies a fundamental global re-pricing of China’s “new-quality productive forces”: investors are shifting from short-term thematic speculation toward long-term value anchoring rooted in technological sovereignty and industrial autonomy.

Policy Catalyst: Systemic Upscaling—from Controlled Nuclear Fusion to Domestic Substitution

The most immediate catalyst behind this tech-stock rally has been a wave of top-level policy announcements rolled out recently. In late June, the National Energy Administration convened a special advancement meeting on controlled nuclear fusion, formally designating the “artificial sun” project as a priority within the “15th Five-Year Plan” (2026–2030) for major national science infrastructure. Simultaneously, the Ministry of Industry and Information Technology (MIIT) released the Three-Year Action Plan for Domestication of Advanced Semiconductor Manufacturing Equipment (Draft for Public Comment), targeting domestic production rates exceeding 90% for nodes at 28 nm and above by 2025. Policy language has escalated from generic “encouragement” to concrete terms like “intensive攻坚 (campaign-style efforts)” and “priority,” significantly bolstering market confidence in hard-tech investment certainty.

Notably, policy initiatives follow a “dual-track” strategy: one track targets frontier, disruptive technologies (e.g., nuclear fusion), while the other reinforces industrial security fundamentals (e.g., semiconductor equipment). This combination effectively bridges investor concerns about hard-tech investment payback periods—nuclear fusion embodies long-term visionary potential, whereas semiconductor equipment domestication offers clear, near-term order visibility. Stocks such as Baily Electric, Lianchuang Optoelectronics, and CNNC Technology—all surging to daily trading limits—epitomize this policy-convergent sweet spot: they benefit both from surging demand for core components of fusion devices (e.g., superconducting magnets, laser drivers) and deep integration into domestic photolithography and etching equipment supply chains. Policy is no longer vague “support”—it now delivers verifiable credibility through specific technology roadmaps, milestone timelines, and performance metrics.

Valuation Recovery: Hong Kong Tech Stocks Enter a “Dual-Davis Double-Click” Window

The Hong Kong tech sector’s breakout carries even greater symbolic weight. With the Hang Seng Tech Index rising over 4% in one day—and Horizon Robotics surging 15%, Bilibili up 8%, and both Baidu and Meituan gaining over 7%—the rally reflects dual drivers: valuation recovery and improved earnings expectations. As of June 28, the Hang Seng Tech Index’s forward P/E stood at 28.3x—still well below its 2021 peak of 42x and markedly lower than the Nasdaq-100’s current 45x multiple. With confirmation that China’s AI application layer commercialization is accelerating—e.g., Baidu’s ERNIE Bot 4.5 deployed in government services, Meituan’s AI-powered dispatch system boosting riders’ daily order volume by 12%—coupled with rising market expectations of Fed rate cuts improving liquidity conditions, Hong Kong tech stocks have entered a classic “Dual-Davis Double-Click” window (i.e., simultaneous expansion of both P/E multiples and earnings per share).

Crucially, southbound fund flows signal a structural shift. According to HKEX data, net inflows from mainland investors into Hong Kong tech stocks totaled HK$32.7 billion during the first two weeks of June—the highest monthly figure so far this year. This is not merely a low-valuation chase; rather, it reflects institutional recognition of “earnings quality reconstruction” among Hong Kong-listed tech firms. Horizon Robotics has secured L3 autonomous driving chip design wins from multiple automakers; Bilibili’s advertising revenue has grown over 45% for three consecutive quarters—its growth engine has shifted decisively from user acquisition to monetization efficiency. Hong Kong tech stocks are shedding their old “high-beta, low-quality” label and gradually earning valuation weight parity with A-share hard-tech peers.

Structural Divergence: AI Applications Lead; Hardware Chains Under Pressure—Signaling a New Phase of Industrial Evolution

Market internals reveal sharp structural divergence: AI application-layer and semiconductor equipment stocks led gains, while compute hardware segments—including PCBs and CPO (co-packaged optics)—suffered steep corrections. Pengding Holdings and Honghe Technology hit daily trading limits on the downside—clear evidence of a pivotal shift in industry-wide momentum. The current AI wave has clearly moved past the infrastructure-buildout phase and entered a new cycle defined by “application penetration.” Investor focus has pivoted from “Is compute power sufficient?” to “How is compute power monetized?”—explaining why application-focused companies like Ctrip (AI travel-planning assistant user penetration at 37%) and Baidu (over 200,000 enterprise customers for ERNIE Bot) posted outsized gains, while upstream hardware players faced valuation repricing amid capacity overexpansion and price wars.

This divergence fundamentally reflects the natural rhythm of technology industrialization. When a disruptive technology transitions from lab prototype to scalable commercial deployment, value creation inevitably shifts from “can we build it?” to “can users adopt and pay for it?” While semiconductor equipment makers on the STAR Market—such as TopNano and NAURA—did not post dramatic rallies, their order visibility and gross margins continue to rise steadily, signaling that domestic substitution has evolved from “policy-driven” to “commercially driven.” The market’s price action is performing a real-time cognitive recalibration of China’s tech-industry value chain: true competitive moats lie not in blueprints—but in customer willingness to pay and repeat-purchase rates.

Re-Pricing “New-Quality Productive Forces”: A Paradigm Shift in Global Capital Allocation Logic

The concurrent record highs of the Hang Seng Tech Index and the STAR 50 Index signify far more than technical milestones. They mark a paradigm shift in how global capital prices Chinese assets. Over the past decade, foreign investors primarily assigned premiums based on “GDP growth + macroeconomic stability.” Today, incremental capital is re-pricing China’s assets on a new framework: “technological sovereignty acquisition capability + control over critical industries.” The FTSE China A50 futures index’s single-day gain of over 1% exemplifies international institutions’ swift response to this logic shift.

Looking ahead to Q3, sector-wide sentiment across the tech supply chain has been markedly upgraded. According to CICC’s industry surveys, domestic wafer fabs’ equipment tender volumes for H2 2024 are up 42% YoY; AI server GPU procurement budgets have been raised by 18%; and orders for specialized materials tied to controlled nuclear fusion are already scheduled through Q2 2025. These micro-level evidence chains are transforming policy vision into quantifiable financial metrics. For strategic allocators, Chinese tech stocks are transitioning from “risk assets” to “strategic assets”—their volatility remains, but the certainty of long-term holding value is strengthening at an unprecedented pace.

This collective surge will ultimately be recorded in history as a watershed moment: it heralds China’s formal departure from the “U.S.-tech benchmarking” era of imitation investing—and ushers in a new epoch anchored in independent technology pathways, homegrown application scenarios, and deep strategic national resilience. Where valuation recovery meets industrial breakthrough, and where policy resolve collides with commercial reality, every pulse of the capital market is redrawing the coordinate origin of the global innovation map.