China stocks closed up on Thursday, hovering near its highest level in more than three years, as investors remained bullish on AI plays despite concerns over potential U.S. restrictions on Chinese innovative drugs.
** China's blue-chip CSI300 Index SZSE:399300 ended up 2.3% near its highest level since March 2022, while the Shanghai Composite Index SSE:000001 gained 1.7%. Hong Kong's benchmark Hang Seng index HSI:HSI edged 0.4% lower.
** Onshore AI shares SSE:930713 jumped 6.8%, their largest single-day gain since October 18, 2024, with sector bellwether Cambricon Technologies SSE:688256 surging 9%.
** Shares of optical module giants Zhongji Innolight SZSE:300308 and Eoptolink Technology SZSE:300502 climbed 14% and 13%, respectively.
** Technology and artificial intelligence stocks have been the main drivers of China's stock market rally this year, with the STAR50 Index SSE:000688 up 34% year-to-date.
** Biotech shares, both onshore (.CSI931440) and offshore HSI:HSHKBIO, slumped at the open on Thursday following reports that the Trump administration is considering sweeping restrictions on Chinese drug imports. However, losses were trimmed by market close, with the CSI Brand Name Drug Index down just 0.8%.
** The draft targeting Chinese innovative drugs is unlikely to be implemented in practice, analysts at Orient Securities said in a note to investors, citing challenges such as restricting patients from accessing more effective treatments.
** "A previous bill targeting Chinese CROs (Contract Research Organizations), such as WuXi AppTec, also failed to be effectively enforced."
** Tech shares trading in Hong Kong HSI:HSTECH fell at the open but were roughly flat by market close, with Alibaba NYSE:BABA up slightly after the company said it plans to raise $3.2 billion through the sale of a zero-coupon convertible bond.
** Shares of pig producers Muyuan SZSE:002714 rose 5.6% after media reported that China's government has summoned its biggest pig breeders to discuss measures to cut production.