China’s major stock indices experienced mixed performance last week, with the Shanghai Composite edging down 0.03% while the Shenzhen Component (-0.91%) and ChiNext (-1.40%) saw steeper declines amid shrinking trading volumes. The market displayed clear sector divergence, with pharmaceuticals and autonomous driving emerging as clear outperformers. The pharmaceutical sector surged following regulatory tailwinds, as the NMPA’s unprecedented single-day approval of 11 innovative drugs on May 29 boosted sentiment. This built on global R&D progress including FDA clearances for Lantern Pharma’s LP-184 and domestic approvals for Fubei Bio’s ALS treatment. Notably, China’s innovative drug outbound licensing deals hit $36.9 billion in Q1 2025 alone, surpassing H1 2024’s total.
The autonomous driving sector witnessed explosive gains, fueled by major industry developments. Domestic catalyst came from Pony.ai’s strategic partnership with Guangzhou Public Transportation Group signed on May 28, covering autonomous vehicles and mobility platforms. This coincided with Tesla’s announcement to launch Robotaxi services in Austin on June 12, sending related stocks soaring. Component suppliers like Tongda Electric (+50.13%) and China Post Technology (+45.98%) led the charge, while pharmaceutical leaders Shutai Shen (+60.41%) and Ruizhi Pharmaceuticals (+29.67%) topped the weekly gainers list.
Money flow data showed pronounced divergence in institutional activity. Technology firms including Shenghong Tech, Haige Communications, and Shanghai Electric Power attracted over 500 million yuan in net inflows, signaling continued interest in strategic emerging sectors. Conversely, market heavyweights faced profit-taking, with BYD, CATL, Kweichow Moutai and nuclear power players suffering over 1 billion yuan in net outflows. The contrasting capital movements suggest ongoing portfolio rebalancing as investors weigh regulatory support for innovation sectors against valuation concerns in traditional leaders. Market participants are closely monitoring whether this rotational pattern will sustain as China’s economic recovery continues unfolding.
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