China's annual A-share trading turnover hits historic high

The year-to-date trading turnover of China's A-share market exceeded 405 trillion yuan ($57.6 trillion) as of Monday, the first time that annual turnover has surpassed 400 trillion yuan.

By Tuesday's close, the Shanghai Composite Index finished at 3,919.98, up 0.07 percent, while the Shenzhen Component Index closed at 13,368.99, up 0.27 percent. The ChiNext Index, which tracks China's Nasdaq-style growth enterprises, ended at 3,205.01, up 0.41 percent.

The recently convened Central Economic Work Conference maintained an accommodative macro policy stance, with the policy focus shifting from the expansion of economic output toward balancing quality and sustainability, said Zhang Gang, an analyst at Central China Securities, in a report on Tuesday.

The meeting highlighted a core theme of prioritizing technology and strengthening industry, while accelerating the development of a modern industrial system. Industries such as artificial intelligence, commercial spaceflight, quantum technology and 6G remain clearly defined medium- to long-term strategic directions, said Zhang.

He added that, with the year coming to a close amid the interplay of liquidity fluctuations and the digestion of policy expectations, the Shanghai Composite Index is likely to consolidate around the 4,000-point level.

China Merchants Bank Institute said on Monday that, looking ahead, ample liquidity remains the core driver of the A-share market. A moderately loose monetary policy and abundant liquidity conditions are expected to persist in China, while the United States Federal Reserve is also likely to remain in a rate-cutting cycle next year. Moreover, deeper efforts to curb "involution-style" competition are expected to support further improvement in China's economic fundamentals over time.

Goldman Sachs said in a report on Monday that the Chinese mainland's A-share market and Hong Kong's H-share market delivered returns of 16 percent and 29 percent, respectively, in 2025.

The rally since the beginning of the year has been mainly driven by valuation recovery. By sector, materials, healthcare and communication services performed best, according to the global investment banking, securities, and asset and wealth management firm.

Equity strategists at Goldman Sachs expect the bull market to continue, although at a slower pace. They forecast that Chinese equities will rise 38 percent by the end of 2027, supported by estimated earnings growth of 14 percent in 2026 and 12 percent in 2027, as well as an around 10 percent upside from estimated further valuation recovery.

The release of Chinese tech startup DeepSeek's R1 reasoning model in 2025 triggered a strong rebound in Chinese technology stocks, led by data and cloud services, semiconductors, artificial intelligence infrastructure and power-related sectors. Breakthroughs in artificial intelligence have reshaped the technology stock landscape. Goldman Sachs estimates that, over the next decade, the widespread adoption of AI could boost corporate profits by 3 percent annually through cost savings, productivity gains and new revenue opportunities.

The report added that valuations of stocks in China's AI technology ecosystem have recovered but remain relatively low compared with those in the United States. Technological competition between China and the US could give rise to structural winners along the value chain.

The UBS Chief Investment Office recently said that AI innovation and related spending are expected to drive substantial profit growth in China's technology sector in 2026. Favorable liquidity conditions and reasonable valuations are also expected to support further upside in Chinese equities.

The year 2025 was a breakthrough one for innovation in China's technology sector, with significant progress across all segments of the AI value chain. New Chinese AI models have demonstrated technological leadership, while policy support has strengthened the resilience of the ecosystem, said the UBS CIO.

After this year's strong performance, valuations of Chinese equities still remain below those of global peers and below historical highs, holding upside potential. UBS expects robust earnings growth in 2026 to drive Chinese technology stocks higher.

Beyond technology shares, the overall outlook for China's equity market has also improved. Enhanced domestic liquidity, solid earnings growth and retail investor inflows are providing momentum.

The UBS CIO expects the upcoming 15th Five-Year Plan (2026-30) to increase support for manufacturing and technology.

jiangxueqing@chinadaily.com.cn