Shanghai Composite Index: A Decade‑Long Rally Concluded on a High
The Shanghai Composite closed the year 2025 at 3,968.84 points, an 18.41 % gain from the start of the year and the strongest annual rise since 2020. It sits just shy of its 52‑week high of 4,034.08 set on 13 November, while its 52‑week low of 3,040.69 from 6 April remains a distant memory of the earlier volatility that characterised the first half of the year.
1. Structural Drivers Behind the Rally
The 2025 market narrative was framed by a dual‑core dynamic:
High‑dividend banking stocks – Institutions such as Bank of China and Industrial & Commercial Bank of China surged to new highs, attracting risk‑averse insurers and pension funds. Their outperformance pushed the Composite past the 4,000‑point barrier.
High‑growth tech and resource sectors – The “innovation” segment, including semiconductor equipment, AI‑related hardware, and rare‑metal mining, delivered gains that eclipsed the traditional blue‑chip base. This “technology‑resource” wedge generated the most spectacular returns, with over 540 shares doubling in value and more than 18% of the constituent stocks rallying above 100 %.
The result was a “dumbbell” structure: a powerful, stable left‑hand side (banks, utilities) and a high‑velocity right‑hand side (tech, mining). This structure was reflected in the market’s performance metrics: the total trading volume surpassed 410 trillion yuan, a 63 % jump over 2024, and the market cap climbed to an all‑time high of 119.95 trillion yuan.
2. Sector Performance
- Gold, silver, copper: The metals cycle rebounded, lifting the non‑financial mining sector to a 97.48 % yearly gain.
- Communications: 63.64 % growth, fueled by infrastructure upgrades and 5G roll‑outs.
- Electronics: 57.68 % rise, driven by domestic demand for consumer electronics and industrial automation.
- Defense and heavy industry: Over 40 % gains, underscoring the strategic shift towards self‑reliance in critical technologies.
The Composite’s performance mirrored the broader macro narrative: the Chinese government’s “dual circulation” strategy, coupled with targeted fiscal stimulus, created an environment where both value and growth could thrive concurrently.
3. Global Context
While Western indices such as the S&P 500 and the Dow Jones lagged, the Shanghai Composite outpaced them, thanks to a combination of strong domestic policy support and robust investor appetite for high‑tech assets. Global market sentiment, as reflected by AI search trends and billionaires’ wealth growth (a $3.3 trillion increase in 2025), remained bullish, but the real driver of Shanghai’s ascent was domestic momentum.
4. Outlook for 2026
Historical data suggests a roughly 50 % probability of an upward move in January for the Composite. Analysts are keen on two main themes:
- Technology self‑sufficiency – AI processors, photonic components, and semiconductor fabs are slated for massive capital inflows.
- High‑end manufacturing upgrades – Intelligent driving, smart factories, and aerospace components offer significant growth potential.
Given the market’s recent continuous 11‑day rally and the policy‑aligned investment themes, the Shanghai Composite is poised to continue its upward trajectory into the new year. However, investors should remain vigilant to potential regulatory adjustments and global economic shocks, which could temper the current exuberance.
5. Conclusion
The Shanghai Composite’s 2025 performance underscores a pivotal moment in China’s equity markets: a synchronised surge of value and growth, underpinned by strategic policy interventions and a resilient domestic economy. As the market enters 2026, the key question will be whether the dual‑core engine can sustain its momentum amidst an increasingly competitive global landscape.