Market Overview – 2026‑01‑05
On the first trading day of 2026, the Chinese equity market delivered a robust “opening‑red” rally that reverberated across both the Shanghai and Shenzhen exchanges. The Shanghai Composite Index advanced 1.38 % to 4,023.42 points, the Shenzhen Component Index climbed 2.24 % to 13,828.63 points, and the ChiNext Index surged 2.85 % to 3,294.55 points. Together, the two main boards recorded a combined turnover of 2.57 trillion CNY, an increase of more than 5 trillion CNY from the previous session.
Institutional and Foreign‑Investor Sentiment
Goldman Sachs amplified its bullish stance on Chinese equities on January 5, issuing a January 5 report that recommends a high allocation to the market for 2026. The firm highlighted that the current valuation of China’s stock market is markedly discounted relative to its global peers and projects annual gains of 15 %–20 % for 2026 and 2027. This dovetails with a broader sentiment among foreign investors that the market remains undervalued and poised for a sustained rebound.
In the days leading up to the new year, institutional funds routed net inflows into the market. While the overall A‑share market experienced a net outflow of 6.3 billion CNY during the day, the Shanghai–Shenzhen 300 Index attracted 4.0 billion CNY of net inflows, underscoring selective confidence in blue‑chip and mid‑cap segments. In addition, the “Dragon List” data revealed that the electronics sector led the day’s net inflows with 31.2 billion CNY, and a single stock—storage‑chip leader 兆易创新—registered a net inflow of 2.046 billion CNY, the highest among all A‑share constituents.
Sectoral Drivers
The rally was underpinned by a confluence of positive fundamentals and policy cues:
| Sector | Key Highlights | Performance |
|---|---|---|
| Insurance | Strong earnings outlook, favorable regulatory environment | +6.72 % |
| Medical Device & Services | Surge in demand for brain‑interface and oxygen‑related equipment | +5.84 % / +5.59 % |
| Semiconductors | Storage‑chip stocks, notably 兆易创新, hit all‑time highs | +3.85 % |
| Technology & AI | Brain‑interface concepts led the market; AI stocks gained traction in Japan, boosting sentiment in China | +2.3 % |
| Consumer & Tourism | Mixed performance; free‑trade zone and duty‑free segments lagged | – |
The medical‑technology cluster, particularly brain‑interface and oxygen‑therapy equipment, benefited from both domestic demand and international exposure, while the semiconductor sector capitalised on sustained chip‑domination and supply‑chain resilience.
Market Mechanics
- Volume and Participation: Over 4,100 A‑share stocks moved higher, with more than 1,200 shares hitting the daily limit, a 75 % “lock‑up” rate that signals aggressive buying.
- Limit‑Up Activity: 31 stocks closed at the daily ceiling, 42 attempted but failed to secure a limit‑up, and 125 stocks achieved a “stuck” limit‑up.
- Turnover: The combined Shanghai–Shenzhen turnover of 25.7 trillion CNY represents a 5.0 trillion‑CNY increase from the prior session, reflecting a sharp liquidity injection.
Forward Outlook
- Macro‑Environment: The China‑US trade dynamic remains a tail‑wind for technology and semiconductors, while fiscal stimulus policies are likely to sustain growth in insurance and healthcare.
- Valuation: With the Shanghai Composite nearing its 52‑week high of 13,806.7 points, valuation compression relative to global peers is expected to continue, providing a compelling case for further upside.
- Risk Factors: Potential policy tightening on foreign investment, geopolitical tensions, and the possibility of a slowdown in global demand could temper the rally.
In sum, the opening‑red of January 5 signals a renewed confidence in the Chinese equity market. The confluence of institutional inflows, favourable sectoral dynamics, and a bullish macro narrative positions the market for a sustained “slow‑bull” trajectory through the first half of 2026.
