Chinese tech stocks are surging today as traders react to real-world news. TikTok maker ByteDance has released a new video creation app called Seedance 2.0, but it’s not a half-baked beta.
The generated videos look so good that they immediately caught everyone’s attention. By the time the market closed, COL Group had reached its daily limit of 20%. Shanghai Film and Perfect World each rose 10%. Baidu rose a shocking 9%, Alibaba soared 3.6%, Xiaomi rose 8.32% and Jingdong rose 7.16%.
The CSI 300 index rose 1.4% and didn’t need outside help to get there. Traders saw a fresh high-tech product that didn’t require five years of guessing to prove it. And with all the bad real estate data and noise around U.S. Treasuries, they ditched slow bets and ran to what’s actually working: apps and chips.
Chip debut and stock rule changes spark trading frenzy
Montage Technology made its trading debut in Hong Kong and completely exploded. It opened at HK$168, compared to the public price of HK$106.89. It then soared to HK$176 and closed at HK$175, a 64% rise in one day.
Montage has raised HK$7.04 billion, or $900 million, to funnel into research. The company makes memory interface chips used in AI data centers to speed up how processors and memory work together. As of early Monday, it was the 10th most traded stock based on volume. People weren’t waiting to buy this.
While the tech buzz heats up, China’s stock exchanges have made things easier for listed companies. Regulators said they will now allow companies to raise cash through private placements or convertible bonds even if their stock prices are below their IPO prices.
The new rules only apply to companies they call “high quality.” Stock exchanges in Shanghai, Shenzhen and Beijing all issued identical statements. What is their purpose? We will promote further innovation. Contribute to further expansion. Basically, they want more companies like Montage.
Behind the bond warning and real estate collapse
The rest of the market was less benign. Chinese regulators have told local banks to stop buying large amounts of U.S. Treasuries. Not tomorrow. Right now. If banks already had large amounts of assets, they were told to reduce their holdings. The state’s own treasury pile is not part of it.
But this really shook things up. US bond yields rose. The 10-year bond rose to 4.25%, the 30-year bond rose to 4.88%, and the Bloomberg Dollar Index fell 0.2%. Investors looked for other places to store their cash. Gold was one of them.
The rest is real estate. With just two months left until 2026, S&P Global Ratings has already revised down its forecast for China’s real estate market. They currently expect sales to decline by 10% to 14%. In October, it was probably 5% to 8%. That didn’t happen.
Last year’s sales decreased by 12.6% to 8.4 trillion yuan, half of what they were in 2021. The market has been flooded with unsold homes for the sixth year in a row. Developers never stop building. No buyers appear. Prices are expected to fall another 2-4% this year.
“The recession is so deep-seated that only the government can absorb the excess inventory,” S&P said.
They added that the state could step in to buy more homes and convert them into affordable housing, but that hasn’t happened in earnest yet. China’s housing turmoil has not been resolved. That’s why investors are choosing technology today. It is the only thing that shows any signs of life.
