Despite the disrupted supply chains, these days the mainland’s semiconductor stocks are among the best performing – globally.
Most Chinese chipmakers’ stocks rallied on March 13. Flash memory designer GigaDevice (603986:SH) added 3.47%, reaching a market cap of CNY 99.72 billion (USD 14.26 billion). AMEC (688012:SH) went up by 9.63% and Montage Technology (688008:SH) closed the day 4.31% higher. A newly launched microelectronics firms-focused ETF (159801:SZ) went up by 2.74% today, closing the week – which was quite tough for traders on a global scale – only 2.87% lower than the previous one.
With its complex, geographically diverse supply chain, China’s semiconductor industry was directly hit by the COVID-19 outbreak, with predictable lockdowns and other economically painful restrictions. Nonetheless, many local up-and-coming chip developers claim that their business processes have barely been affected. One example is Wuhan-based NAND memory maverick YMTC. Several sources close to the company told EqualOcean that the chip designer has been operating normally throughout the quarantine period.
As the official numbers of confirmed cases in China are dropping drastically, the country seems to be verging on a triumph in combating the epidemic. The victory is in combating the spread, not containing it hermetically to affected areas – the latter was simply impossible, and, as a result of the planetwide sloth, the chickens have come home to roost now for the rest of the world: as of March 13, over 128,000 cases had been confirmed globally.
In 2019, the stock market boomed in the United States. The Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite added 22.3%, 28.9% and 35.2% respectively in that year. Ironically enough, what goes up must come down. The first two weeks of March turned out to be the worst in decades for these three indicators and, hence, for millions of investors in public equity globally.
The Shanghai and Shenzhen bourses, which also saw a major market slump right after the prolonged Lunar New Year holidays, now are considered attractive by many investors. Of particular interest is the Star Market, China’s answer to Nasdaq (read more about the board’s performance during the coronavirus outbreak). The new board has become a home for a handful of chipmakers, including the abovementioned AMEC, Montage, as well as EEPROM developer Giantec Semiconductor (688123:SH) and lithography equipment firm KINGSEMI (688037:SH), to name a few.