The Shanghai Composite Index rose 0.7% as of the midday trading break – a new high since August 2015, pushing the benchmark’s weekly gain so far to 2.7% and setting it on track to post the best run since November 2024.

The blue-chip CSI300 Index jumped 1.2% to a fresh 10-month high.

Domestic AI-related shares led the surge onshore, with the CSI Semiconductor Industry Index jumping 6.4% to the highest since late 2021 and the CSI Artificial Intelligence Index rising nearly 5%.

The rally gained momentum after Reuters reported that Nvidia has asked Foxconn to suspend work on the H20 chip, the most advanced model the US company is currently allowed to sell in China.

This came after DeepSeek released an upgrade to its flagship V3 model AI model yesterday, with domestic semiconductor support, underscoring Beijing’s push toward chip self-sufficiency.

“Given the ongoing uncertainty around US-China AI chip trade policies… the tech self-sufficiency theme is set to gain more traction,” an analyst at CMS Electronics Equity Research said.

The renewed tech optimism could further fuel China’s rally, with the Shanghai benchmark now up 23% from its April low, as domestic investors rotate funds into stocks amid easing US-China tensions and Beijing’s push against industrial over-capacity.

“For now, FOMO sentiment still dominates, leading to buy-the-dip flow on every market correction,” Goldman Sachs analysts said.

“Generally onshore investors believe that downside risk from now to the September parade is small,” they said.

Hong Kong’s benchmark Hang Seng gained 0.3%, narrowing its weekly loss to 0.3%, as investors rotated back onshore to chase the A-share rally.

Tech shares also led gains, with the sub-index up 1.6% and AI sector up 1.7%.