Chinese equities advanced to a one-week high on Wednesday, with gains in semiconductor shares outweighing sharp losses in optical module makers, while Hong Kong stocks also edged higher, Reuters reported. Improving global risk sentiment after easing tensions in the Middle East further supported investor confidence.
By the midday break, China's blue-chip CSI300 Index had climbed 1%, while the Shanghai Composite Index gained 1.3%. Hong Kong's Hang Seng Index was also in positive territory, rising 0.1%.
Chip stocks lead market gains
Semiconductor stocks emerged as the biggest winners after Reuters reported that South Korean memory giants Samsung Electronics and SK Hynix are evaluating chipmaking equipment from China's Advanced Micro-Fabrication Equipment (AMEC) for potential use at their manufacturing facilities in China. The move is aimed at reducing exposure to the risk of tighter U.S. export controls.
The development sparked a strong rally in China's semiconductor sector. Shares of AMEC jumped 14% in Shanghai trading, while an index tracking Chinese semiconductor materials and equipment companies surged 9%. Broader chipmaking stocks also posted robust gains, helping lift the overall market.
Optical module makers tumble
The gains in chip stocks were partly offset by steep declines in China's optical module manufacturers.
Reuters reported that the U.S. administration is drafting a ban on imports of new models of Chinese data center components, triggering heavy selling in export-oriented companies linked to the sector.
Among the biggest losers were Zhongji Innolight, Eoptolink Technology and Suzhou TFC Optical Communications, as investors weighed the potential impact of fresh U.S. trade restrictions on future exports.
Easing geopolitical tensions boost sentiment
Investor sentiment also improved after global equity markets rallied on signs that tensions in the Middle East had eased further.
The optimism followed indications that mediators were making progress toward ending the conflict involving the United States and Iran, reducing concerns over broader geopolitical risks.
Energy stocks under pressure
Despite the broader market gains, energy stocks in both mainland China and Hong Kong remained under pressure.
The sector weakened as crude oil prices retreated amid hopes of a diplomatic resolution to the Middle East conflict, reducing expectations of supply disruptions and weighing on oil-related shares.
