Optical communication shares lift China stocks on US AI gains

Business Recorder reported that Chinese equities advanced on Thursday, with optical communication shares leading the gains as investors tracked a rally in US artificial intelligence companies. The CSI300 index added 0.5% by the lunch break, while the Shanghai Composite rose 0.4% and the Hang Seng in Hong Kong gained 0.1%. Hong Kong shares were broadly unchanged overall.

Optical module makers Eoptolink Technology, TFC Optical Communication and Zhongji Innolight climbed 4.2%, 10.5% and 5.5%, respectively. The move followed upbeat forecasts from US-listed CoreWeave and Super Micro Computer, which signalled strong demand for AI computing capacity. US optical firm Lumentum also gained nearly 14% in New York.

Tencent Holdings shares dropped 3.8% to a two-week low after it reported a record negative free cash flow for the quarter alongside higher AI capital spending. UBS analysts told clients that soft consumer demand could restrain advertising gains, and that returns on AI spending may take longer to materialise. Materials stocks fell 3.6% as gold miners weighed, with China Gold International Resources sliding 5.9%. Onshore financial shares were steady after the central bank said on Wednesday it would keep a loose monetary stance without signalling explicit cuts to rates or reserve requirements.