China’s A-share market opened 2026 with strong momentum, with the Shanghai Composite Index reaching a new recent high. On January 5, the first trading day of the new year, the A-share market opened higher and extended gains from before the holiday. All three major indices rose throughout the session. The Shanghai Composite performed particularly strongly, breaking above the 4,000-point level again for the first time since last November.
By the close, the Shanghai Composite Index rose 1.38% to 4,023.42; the Shenzhen Component Index gained 2.24% to 13,828.63; and the ChiNext Index climbed 2.85% to 3,294.55.
Market data showed that more than 4,100 stocks advanced, with most of the 31 major industry sectors rising. Insurers led the gains, while themes related to brain–computer interfaces, medical devices and innovative drugs saw a wave of limit-up moves. Precious metals, pharmaceuticals and semiconductors also posted strong gains. Meanwhile, sectors including duty-free, oil, cross-border payments, airports, shipping and ports, and banking retreated.
Trading activity picked up sharply after the New Year holiday. Combined turnover in Shanghai and Shenzhen exceeded RMB 2.5 trillion for the fifth consecutive trading day, rising by about RMB 500 billion compared with the previous session at the same time.
In Hong Kong, following strong gains during the New Year period, major indices were mixed on January 5. As of the time of reporting, the Hang Seng Index rose 0.16%, the Hang Seng Tech Index gained 0.28%, while the Hang Seng China Enterprises Index slipped 0.15%. Innovative drug-related stocks strengthened, while auto stocks declined.
Market strategists said the linkage between Hong Kong stocks and A-shares has historically been strong, and the recent performance in Hong Kong reinforced expectations for post-holiday strength in A-shares. They noted that market conditions around the Lunar New Year are typically more favourable for bullish sentiment, with overall opportunities outweighing risks, and expressed optimism toward technology-led performance after the holiday. They attributed the earlier rally to factors including relative valuation catch-up, renminbi appreciation and strong technology industry trends.
Investment managers also observed that market risk appetite has been rising, with growth-oriented styles clearly outperforming. They expect market focus in the near term to remain on technology-related themes, including AI applications.
Overall, institutions broadly believe that supported by multiple positive factors—such as renminbi appreciation and an early policy push—the A-share “spring rally” has already begun, and the outlook merits close attention.
Strategists further noted that policy expectations, liquidity and fundamentals are being revised upward simultaneously, suggesting the market may welcome a spring “strong start.” As economic transformation accelerates, risk-free yields decline and capital market reforms advance, the underlying trend of a “transformation bull market” is becoming more evident.
They highlighted “the emergence and continuation of prosperity under price signals” as a new investment clue, noting that price dynamics are gaining importance and industrial momentum is taking shape. Key focus areas include technology, non-bank financials and consumption.
Looking ahead to January, analysts said some factors supporting the earlier rally may continue, with additional potential catalysts expected. After a two-month earnings lull, the market is entering the annual results pre-announcement window, bringing renewed fundamental validation. Seasonal effects around year-end and the start of the year may also influence the relative performance of large versus small caps and growth versus value styles, with growth sectors’ advantages likely to persist.
They added that 2026 represents a year in which multiple positive factors converge, with the foundation of the bull market remaining solid and the spring rally having arrived earlier than usual. The current transformation-driven bull market is expected to be gradual, with a higher and more stable centre and a longer duration than in past cycles.
On sector allocation, strategists suggested focusing on industries with high overseas revenue exposure, including electronics, home appliances, autos and power equipment; watching cyclical stocks as the economic cycle recovers; and paying attention to sectors with potential bottom reversals, such as food and beverage, agriculture, services and pharmaceuticals.