Cambricon briefly overtakes Moutai as China’s priciest stock

[SHANGHAI] A leading Chinese chipmaker briefly replaced a top liquor giant as the country’s most expensive onshore stock, as investors doubled down on innovative technology firms to keep driving a broader rally.

Shares of Cambricon Technologies surged as much as 10 per cent to 1,465 yuan on Wednesday (Aug 27), momentarily surpassing those of Kweichow Moutai, the best known maker of the fiery Chinese spirit baijiu. The stock has since pared the gain and conceded the top spot.

China’s stock market is heavily dominated by retail traders, who often track the price of a stock as it influences affordability.

The ascent of Cambricon highlights an important shift in China’s stock market landscape as investors moved away from consumer firms and bet on the tech sector to re-energise an economy mired in deflation and trade tensions. Also fuelling demand for the stock was a recent move by Goldman Sachs Group to raise its price target by 50 per cent on a brighter profit outlook.

The gains also came after Cambricon reported a record first-half profit. The Beijing-based artificial intelligence semiconductor producer, founded in 2016, has seen its stock rise nearly 120 per cent this year.

“The rapid development of high-end chips and AI has outpaced traditional consumer sectors, which are struggling amid weak domestic demand,” said Kenny Ng, a strategist at China Everbright Securities International. “The chip industry is also benefiting from the US-China tech rivalry, especially as uncertainty around H20 chip supply intensifies.”

Ng was referring to a recent report that Nvidia has instructed suppliers to stop production related to the H20 AI chip. Meanwhile, Beijing has urged local firms to avoid using Nvidia’s H20 processors, particularly for government-related purposes.

These developments have boosted demand for homegrown companies deemed to have the potential to supercharge China’s pursuit of tech self-sufficiency.

Led by AI-related stocks and aided by ample liquidity, China’s onshore stock market has embarked on a surprise rally in recent months. The benchmark CSI 300 Index is up about 9 per cent this month, making it one of the world’s top performers. The STAR 50 gauge, which offers heavy exposure to chip firms, has soared 24 per cent.

In contrast, liquor stocks, once China’s investor darlings, have faltered since the pandemic due to a housing-led consumption slump and Beijing’s frugality campaign. The CSI Liquor Index is down 2 per cent this year, with Moutai’s shares about 4 per cent lower on the back of disappointing earnings.

“In a bullish market, stocks with strong momentum like Cambricon may continue to outperform,” Ng added. BLOOMBERG