China’s Stock Market Surge Driven by Technology, Valuations Remain Rational

At a stock exchange in China, investors watch stock price fluctuations. (Photo/Xinhua)

Chongqing – China’s stock market ended the first three quarters of 2025 on an upward trajectory across major indices, reflecting an overall increase in market valuations. Technology has emerged as one of the key driving forces behind this rise.

According to Wind data, as of September 30, the total market capitalization of A-shares reached 115.86 trillion yuan (about 16.27 trillion U.S. dollars), an increase of 22.23 trillion yuan since the beginning of the year. The SSE Composite Index, SZSE Component Index, and ChiNext Index rose by 15.84%, 29.88%, and 51.20%, respectively, during the first three quarters.

The technology sector is leading the current surge. Chinese economist Song Qinghui noted that technology has become the primary driver of China’s stock market, with investors taking a more rational approach to valuations.

Between 2021 and 2025, tech companies accounted for more than 90% of new listings in China. The sector now represents over 25% of total market capitalization, with the number of tech firms among the top 50 by market cap rising from 18 to 24 since 2020.

From a valuation perspective, the current price-to-earnings (P/E) ratio for the electronics industry stands at 66.88, while for the computer industry it is 56.62 — both among the highest in China. The P/E ratio is a key metric used to assess the relative value of a company’s stock, reflecting strong investor enthusiasm for the technology sector.

Beyond technology, analysts attribute the broader market rally to improved investor sentiment, ample liquidity, favorable industry trends, solid earnings performance, and supportive policies. Global rate cuts and China’s targeted monetary policies have injected capital into the market, aiding valuation recovery.

Additionally, government support for the real economy and an increased emphasis on developing capital markets have strengthened stock market confidence. Continuous liquidity improvements and emerging market hotspots have further fueled this upward momentum.

Li Lifeng, Deputy Director and Chief Strategist at Huaxi Securities Research Institute, emphasized that technology will remain the key focus for investors. Yang Delong, Chief Economist at First Seafront Fund, observed that the technology sector continues to attract substantial capital inflows, suggesting the rally in tech stocks could persist throughout the bull market.

Li also noted that stronger policy support and potential U.S. rate cuts would further boost market sentiment, sustaining the market’s upward trend. Orient Securities commented that compared to previous rapid rallies, the current rise appears more deliberate and well-prepared. With solid policy and capital support, the market shows potential for continued growth.

Global investors are likewise showing renewed interest in China’s capital markets. According to CLS, at the 4th Global Financial Leaders’ Investment Summit held in Hong Kong from November 3–5, Goldman Sachs expressed optimism that global capital allocators would remain interested in China, describing it as one of the world’s “largest and most important economies.” Morgan Stanley also voiced a bullish outlook, with CEO Ted Pick highlighting China’s advances in artificial intelligence, electric vehicles, and biotechnology.