Last week, the People's Bank of China announced that it would promote a series of revitalization incentives to save the stock market, real estate and the economy. After the positive news, the stock market was stimulated and market confidence increased significantly. Chinese chipmaker Semiconductor Manufacturing International Corporation jumped 28% on Monday, surging nearly $13 billion. The founder of SMIC, Zhang Rujing, is an entrepreneur who made his fortune in Taiwan. He once worked for TSMC and later established SMIC in mainland China.

SMIC settled in 2005 after being sued by TSMC for intellectual property infringement. SMIC's other controversies include being blacklisted by Washington and listed as a major target of economic sanctions for allegedly aiding the Chinese military. In the chip war between China and the United States, SMIC's stock rose sharply, which is considered to be an indicator of the return of investor confidence after China's support for the semiconductor industry.

Investment experts and Wall Street analysts have varying opinions on whether it's wise to take advantage of the influx of hot money into the stock market now.

Are AI chips and the semiconductor industry the panacea for economic recovery?

The battlefield of the future world lies in the development of artificial intelligence and chips. China cannot save unfinished buildings, real estate collapse and unemployment, but at least it must be able to continue to develop chip manufacturing and maintain its position in the AI ​​field. According to Bloomberg, SMIC's surge reflects the return of overall confidence in the macro market. In the Sino-US trade war, the chip market will be a core sector under major competition. Beijing extended an olive branch to China's semiconductor industry to rescue AI chips that will be indispensable in the future economy, driving other Chinese technology stocks including Hua Hong Semiconductor and Shanghai Fudan Microelectronics to give the market a shot in the arm.

China's chip manufacturing technology lags behind the United States for many years, and the Beijing government is prepared to continue to spend heavily on semiconductor companies. In addition, it will raise US$27 billion to supervise technology companies including Semiconductor Manufacturing International Corporation and Huawei. Investment experts see China’s bet on AI chips as a panacea for long-term economic recovery.

Smell it first to see if it suits you, and then decide whether to take action.

Despite the strong rebound in China's stock market, other investment experts are not optimistic and believe that China's central bank is in a "panic state." They have gone from being conservative and closed in the past to recognizing the reality of an overall economic recession, and have also followed suit in promoting the United States to spend money during the epidemic. China's financial market and economy are facing an unprecedented bubble. Although it can be regarded as a short-term relief fund to save enterprises, it is impossible to estimate how much impact it will have on the market and long-term effects in the spring of next year. .

Wang Yan, China Emerging Market Analyst and Strategist, believes that buying China's benchmark index can follow suit when the tide rises in various industries, but it is also necessary to wait and see whether a series of stimulus measures will have a positive impact on the overall economic market.

Few international investors enter the market, and local investors still lack confidence

JPMorgan Chase, Invesco and HSBC are among the banks that have expressed a desire to see Beijing's pie painted with tangible proof of funding. Bloomberg Intelligence analyst Marvin Chen said that their international clients are skeptical of the recent rebound in Chinese stocks, because the domestic stock market has declined faster than the overseas stock market.

Investment experts are very reserved about whether the Chinese market will remain optimistic in the long term during the National Day holiday, mainly due to insufficient "trust". We didn't really see treasury funds coming in, which was only a short-term relief. The real estate industry that Chinese people trust most has been collapsed by Evergrande and Country Garden, and AI chips have been suppressed by the United States and are not allowed to be imported. If you want to speculate short-term in this wave, you may want to enter the market and have fun. Otherwise, it is more practical to hold on to the cash for the New Year.

Chinese stocks start to fall after long holiday

On 10/9, both Shenzhen and Shanghai stocks fell, with the Shenzhen and Shanghai index falling by 7%.

This article: China's currency-spreading chip stocks have benefited from the surge. Wall Street has long expected a rapid decline after the National Day holiday? First appeared in Chain News ABMedia.