Buying shifted toward companies that sell AI products and services rather than chip suppliers, a test of whether Chinese AI earnings can carry valuations once state support fades.
Chinese tech shares rebounded on November 2, and the buying favored companies that sell AI to customers over the chipmakers that led this year’s rally. The STAR 50 index, which tracks the largest companies on Shanghai’s technology board, closed up 3.1%, the ChiNext gained 1.9% and the CSI 300 rose 0.8%, Bastille Post reported. The CSI 300 had just posted a record 12 consecutive weekly declines.
Mango Excellent Media rose by its 20% daily limit as investors bought into AI-generated short dramas and animation. "Today we saw investors chasing companies involved in the commercial application of AI," said Timothy Pope, a market analyst at China Global Television Network (CGTN), quoted by Bastille Post. He said investors preferred companies using AI in products and services to the "nuts and bolts" businesses supplying chips.
The gains were also driven by hopes of government help. "A lot of this seems to have come from rising hopes of policy support," Pope said. Reports over the weekend said financial regulators were meeting to discuss measures to support share buybacks. The Shanghai Composite’s close below 3,600 points on the previous Friday had fed speculation that the state would step in, Bastille Post reported.
Robot and device makers led the STAR board, with chip designers close behind
The intraday leaders were a mix. On the STAR board, robot vacuum maker Roborock was up 18.28% as of 2:06 pm, image-sensor maker GalaxyCore was up 13.84% and chip designer ASR Microelectronics was up 13.01%, Jiemian reported, with Insta360 and silicon wafer maker NSIG also gaining. The STAR 50 was up 4.01% at that point before closing at a smaller gain.
Outside technology, liquor maker Kweichow Moutai gained more than 3%, and brokerages rallied on the buyback reports: Guotai Haitong Securities rose more than 2% and at least two other brokerage stocks hit their 10% daily limits, according to Bastille Post.
The backdrop remains weak. China’s official manufacturing and non-manufacturing purchasing managers’ indexes both fell into contraction territory in October, data released over the weekend showed, according to Bastille Post. EastFrontier reported on Monday that regulators had convened banks and brokers as the AI selloff extended the slide.
Brokers point to where AI spending is flowing
Analysts used the rebound to argue for more selective buying. CITIC Securities said investors should take an offensive approach to finding structural opportunities in November and focus on technology manufacturing leaders whose earnings support their valuations, Jiemian reported. It said AI investment is spreading along the supply chain into memory, high-end printed circuit board equipment and data-center power supply, while domestic substitution creates room for analog chips and industrial automation. Zhongyuan Securities said AI applications are spreading into programming, film and games, mathematics research and cybersecurity, and that agents working on their own are calling models far more often, keeping computing power in short supply.
Jiemian also linked the day’s gains to a weekend report from the China Center for Information Industry Development, a think tank under the Ministry of Industry and Information Technology, which said China’s AI inference data had overtaken training data and that daily token calls exceeded 175 trillion as of June.
The shift toward application companies tests a different part of the AI story. Chipmakers have been valued on capacity and orders; companies such as Mango are valued on whether AI lowers production costs or brings in new revenue, which shows up only in later results.
Buyback measures and earnings will decide whether the bounce holds
A one-day rebound after a 12-week slide does not establish a trend. The first test is policy: details of any expanded lending for share buybacks, and whether state-backed funds step up purchases of technology-heavy exchange-traded funds.
The second test is earnings. If application companies such as Mango report revenue from AI-produced dramas and animation in their next results, the rotation will have a basis beyond sentiment. If the next session’s gains return to chip stocks alone, the move will look more like a short-covering rally than a change in what investors are paying for.