The Chinese stock market witnessed an invigorating opening on February 21, as the three major indices started strongly, signaling a surge in investor confidenceThe Shanghai Composite Index rose by 0.18% to 3356.69 points, the Shenzhen Component Index climbed 0.25% to 10821.81 points, and the ChiNext increased by 0.15% to 2228.92 pointsThis robust market performance was primarily fueled by the explosive growth in computing power stocks, underscoring their significance in today's digital economy.
According to recent data from International Data Corporation (IDC), the market size for computing power in China is projected to reach 1.2 trillion yuan in 2024, reflecting a robust year-on-year growth of 35%. Furthermore, analysts forecast that this trend will continue into 2025, with growth rates exceeding 30%. This heightened demand has propelled the earnings expectations of related companies upward, serving as a powerful catalyst for the surge in computing power stocks.
Among the notable performers on this day was Inspur Electronic Information Industry Co., which opened up 5% and even touched the daily limit during tradingAs a globally recognized supplier of computing power equipment, Inspur has greatly benefited from the explosion in market demand, substantially increasing its order volume
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Expectations for its net profit for 2024 suggest an impressive year-on-year growth of 80%. Another strong performer was Sugon, whose stock rose over 8% as it continues to lead in high-performance computing technologies and expand its market share.
Aside from computing power stocks, companies like Huawei with its HarmonyOS, Alibaba, and various AI application stocks also took the spotlightAlibaba, in particular, performed exceptionally well in the US market on February 20, with its shares closing up more than 8%. This surge was largely attributed to its better-than-expected earnings reportIn the third quarter of fiscal year 2025, Alibaba reported revenues of 280.15 billion yuan, a year-on-year increase of 8%, with operating profit skyrocketing by 83% to 41.205 billion yuanNon-GAAP net income also witnessed a 6% increase, amounting to 51.066 billion yuanThe report highlighted that “AI + Cloud” has emerged as a new engine for the company’s growth, with Alibaba Cloud achieving revenue of 31.742 billion yuan, representing a remarkable 13% growth, nearly doubling the growth rate from the previous quarterSuch stellar results have sparked investor confidence in Alibaba’s future prospects and have also driven the rise of related concept stocks within the A-share market.
However, despite the uplift in certain sectors, other areas like AI healthcare, robotics, and rare earth magnet stocks have experienced some pullbacksThis duality of market performance reflects the inherent volatility and uncertainty that characterize stock markets, making it crucial for investors to navigate these complexities strategically.
On the liquidity front, the People's Bank of China conducted a 182.5 billion yuan reverse repo operation for a seven-day term at a rate of 1.50%. With 98.5 billion yuan of reverse repos maturing the same day, this resulted in a net injection of 84 billion yuan into the marketSuch liquidity measures play a supportive role for the stock market, as increased money supply typically leads to declines in money market interest rates
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