With stock ETFs taking in more than RMB555.9 billion over 22 sessions, fund inflows and company buybacks, more than earnings, are setting the floor under China's AI chip stocks.
China’s technology shares rebounded sharply on November 4. The STAR 50, the index of the largest companies on Shanghai’s technology board, closed up 9.92% at 1,265.47, the ChiNext index of Shenzhen growth stocks rose 6.40% to 2,544.73, the Shenzhen Component gained 4.22% and the Shanghai Composite added 2.16% to 3,686.17, Sohu Finance reported. Turnover on the Shanghai and Shenzhen exchanges rose above RMB2 trillion for the first time since September 22.
The move came in the afternoon session after a weak morning. More than 4,600 stocks rose and more than 100 hit their daily limit, according to China National Radio (CNR), with semiconductors leading. Naura Technology and Tongfu Microelectronics hit their 10% limits, while Jingyi Equipment rose by the 20% ceiling that applies on the STAR and ChiNext boards. Optical module makers Eoptolink and Zhongji Innolight, both suppliers to AI data centers, gained more than 10%.
The rally followed a fresh fall in the previous session, and no single announcement triggered it. Reports pointed instead to a combination of steady fund inflows, company buybacks and central bank support that had built up over the preceding sessions.
CXMT’s buyback headlined a wave of company support
The most visible corporate move came from CXMT, the Hefei-based DRAM memory chipmaker listed on the STAR Market. The company raised the planned size of its share buyback from RMB1 billion to RMB2 billion to a new range of RMB2.5 billion to RMB5 billion, following a proposal from chairman Zhu Yiming, the 21st Century Business Herald reported. At the upper end, it would be the largest single buyback in the STAR Market’s history. CXMT’s shares rose more than 13% on the day.
Other AI hardware companies moved to steady investors at the same time. Eoptolink and GigaDevice disclosed progress on their buybacks on the evening of November 3, and Zhongji Innolight denied reports that customers had cut orders, saying most of its 2027 orders were already covered and that a rumored rating downgrade by a foreign brokerage was fake, according to the newspaper.
Policy support added to the effect. The People’s Bank of China cut the rate on its relending facility for share buybacks and stake increases by 0.25 percentage points to 1%, effective November 4. The central bank’s third operation of its swap facility for securities firms, fund managers and insurers, held on November 3, provided RMB100 billion, and more than 20 brokers confirmed winning bids, with plans to put the money into stocks and stock ETFs, the 21st Century Business Herald reported.
Fund flows are doing the heavy lifting
Stock ETFs had drawn net inflows for 22 consecutive trading days through November 3, taking in more than RMB555.9 billion in total. The largest single recipient was Huatai-PineBridge’s CSI 300 ETF, with RMB85.8 billion, while ChinaAMC’s STAR 50 ETF and E Fund’s ChiNext ETF each took in more than RMB60 billion. On November 3 alone, broad-based ETFs traded RMB182.96 billion, buying into weakness as the index fell.
Leveraged investors were moving the other way. Margin financing balances fell by RMB113.18 billion over four sessions, which Zhang Pengyuan, a researcher at the fund data platform Paipaiwang (排排网), said suggested selling pressure was running out. He cautioned that technology valuations and crowding remain high, describing the sector’s risk as large short-term upside matched by equally large volatility.
The pattern fits the broader slide EastFrontier has tracked since China’s CSI 300 entered a bear market in October: large, steady buying through index funds has cushioned the falls, while private investors have cut leverage.
Volume will show whether the rebound holds
Analysts quoted by the newspaper were careful about calling a turn. Zhang Yusheng of Everbright Securities said the market may gradually stabilize but a sustained reversal is still unproven, and Hu Mohan of Mingze Investment (明泽投资) said the tests are whether broad ETF inflows continue without a break and whether trading in semiconductor equipment stocks keeps expanding.
Those are the measures to watch in the coming sessions. A day of turnover back below RMB2 trillion with the STAR 50 giving up part of its gain would suggest November 4 was a one-day rebound. A twenty-third straight day of ETF inflows, alongside progress reports on CXMT’s buyback, would point to a floor that state-linked money and the companies themselves are now prepared to defend.