China stocks rebound on AI optimism despite weak economic data

Chinese equities ended Friday on a positive note, with the Shanghai Composite rising 0.72% to 3,832.3 and the Shenzhen Component gaining 2.21% to 13,578.9. Technology stocks, particularly semiconductor and artificial intelligence (AI) companies, led the rally.

Investor sentiment improved after major US technology companies reaffirmed their commitment to investing heavily in AI. Strong quarterly results from Microsoft, supported by robust growth in its Azure cloud business, also boosted confidence in AI-related stocks globally. As a result, shares of companies such as Cambricon Technologies, Zhongji Innolight and Eoptolink Technology posted strong gains.

However, the broader economic picture in China remained mixed. Manufacturing activity contracted in July for the first time since February, while growth in the services sector also slowed more than expected, pointing to continued weakness in domestic demand.

Despite Friday's recovery, Chinese markets had a weak month overall. The Shanghai Composite declined 6.4% in July, while the Shenzhen Component fell 16.2%, reflecting continued concerns over the pace of China's economic recovery.

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