Chinese stocks opened 2026 with a strong rally, as the Shanghai Composite surged past the 4,000 mark for the first time in nearly three months, led by sharp gains in tech and AI shares. Investors brushed aside geopolitical tensions, betting on innovation-led growth and supportive policy signals to drive further upside.

China stocks rally as Shanghai benchmark tops 4,000 in first New Year trade

January 5, 2026

REUTERS

Chinese stocks start 2026 on a strong footing as the Shanghai Composite climbs above the 4,000 mark for the first time in nearly three months, driven by a rally in tech and semiconductor shares despite ongoing geopolitical tensions.

REUTERS/Aly Song/File Photo

HONG KONG – Chinese stocks began their first trading session of 2026 on a strong footing on Monday, with the Shanghai benchmark climbing above the 4,000 level for the first time in nearly three months, as investors flocked to technology shares and largely shrugged off geopolitical tensions.

By the midday break, the Shanghai Composite Index rose 1.1% to 4,011.45 points, marking its first move above the 4,000 mark since November 14. China’s blue-chip CSI300 Index gained 1.6%, trading near its highest level in almost three months.

Technology stocks led the broader market higher. Shanghai’s tech-focused STAR50 Index jumped 4.1%, while the CSI Semiconductor Index surged nearly 5% to a three-month high. The artificial intelligence index also advanced 2.8%.

Analysts at Bank of America said innovation-driven growth, particularly in artificial intelligence and advanced manufacturing, could emerge as new engines of expansion despite ongoing structural challenges such as the property downturn and weak income growth.

They added that Chinese equities could see further multiple expansion of around 10% to 15%, supported by potential fund inflows from insurers, expectations of U.S. Federal Reserve easing, and policy catalysts including China’s annual “Two Sessions” meetings in March and a planned visit by U.S. President Donald Trump in April.

Meanwhile, energy stocks weakened, with the CSI Energy Index slipping after major state-owned firms with exposure to Venezuela declined. The drop followed reports that the United States had captured Venezuelan President Nicolas Maduro and said it would take control of the South American country.

Huatai Securities analysts said overseas geopolitical disruptions were likely to cause only temporary emotional shocks and were unlikely to derail the market’s upward momentum during the spring rally, citing ample liquidity and supportive policy signals.

Analysts also noted that while the U.S. action could prompt China to reinforce its territorial claims, it was unlikely to accelerate any potential move toward an invasion of Taiwan.

In Hong Kong, the benchmark Hang Seng Index slipped 0.1% to 26,316.55, following a strong rally on Friday. The Hang Seng Tech Index also edged down 0.2%.

-Reporting by Jiaxing Li in Hong Kong; Editing by Harikrishnan Nair/Reuters