China chip stocks are soaring as excitement grows for another round of stimulus from Beijing
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- Chinese chip stocks gained $13 billion on Monday, led by a 22% rise in shares of SMIC.
- The gains come as traders expect Beijing to extend stimulus support to the semiconductor industry.
- China has been in fierce competition with the US's chip business.
Chinese chip stocks soared Monday, fueled by hopes that Beijing's next round of stimulus will boost the country's semiconductor industry.
The sector gained $13 billion on Monday, led by Hong Kong-listed shares of Semiconductor Manufacturing International Corp, which posted a 22% gain. That rise follows a 30% gain for the chipmaker on Friday.
The semiconductor rally comes ahead of a public briefing set for Tuesday, when Beijing is expected to announce further stimulus measures to lift the country's economy out of its long slump and get it back on track to hit its target of 5% GDP growth. The new round of stimulus could include support for its chip companies.
China first announced its stimulus measures last month, pledging to rescue the economy from a struggling property sector and weak domestic demand.
The stimulus measures so far have mostly been aimed at those two headwinds, with China's major cities announcing regional interest-rate cuts, liquidity support, and lower reserve requirements for banks, plus relaxed restrictions on homebuying.
If Tuesday's announcement extends fiscal and political support to semiconductors, it would add fuel to an already intense battle with the US to be the leader in a corner of the tech world that is integral to the booming artificial intelligence sector.
China has invested heavily in its tech sector in recent years and is aiming to raise an additional $47.5 billion—on top of an existing $49 billion from two prior funds—for its "Big Fund," which funnels government-backed investments into its semiconductor industry.
SMIC, the chipmaker leading Monday's surge and a recipient of the fund, has faced a host of US trade restrictions amid allegations that it works closely with the Chinese military.
Since they were first announced, China's stimulus measures have helped fuel a broad stock market rally, with mainland China's benchmark CSI 300 posting its biggest daily gain since 2008 last week before closing for a weeklong break.