(Bloomberg) — Risk appetite is returning to China’s tech sector, with margin lending, trading volumes and benchmarks all climbing back to highs thanks to growing bets that a recent rally will continue.
The outstanding balance of leveraged trades in Shanghai and Shenzhen — a barometer of risk tolerance — jumped to a record 2.8 trillion yuan ($412 billion) on Monday, extending gains into a fourth session. The move suggests a renewed embrace of risk just as the Shanghai Composite Index pushes past 4,200 to close at its highest level in more than a decade.
China’s tech shares have surged this year on sustained enthusiasm for the artificial intelligence trade. The gains have helped drive the tech-heavy STAR 50 Index to a high, and also pushed some notable firms within the co-packaged optics and memory chip space to more than double in value. Meanwhile, the Nasdaq-style ChiNext Index is also about 2% from a peak, though gains for both gauges remain more concentrated than past upswings, with market breadth relatively narrow.
“The risk in tech stocks from a valuation perspective is that multiples are extremely stretched and increasingly look precarious,” says Shi Junbo, a fund manager at Hangzhou XiYan Asset Management Co. “But it’s hard to call a peak right now given how ample liquidity remains. With turnover at these levels, the market is likely to stay lively and the music could keep playing.”
While turnover across exchanges in China has surged to the strongest level since earlier this year, the spike is also raising the prospect of official intervention to rein in overheated metrics and remove excess froth. That happened in January, when record turnover due to the AI frenzy forced authorities to introduce tighter margin requirements and equity sales by the so‑called national team.
More stories like this are available on bloomberg.com
