Shanghai stocks hit 10-year high, Hong Kong shares up as chip, AI shares jump on China's tech focus

Shanghai stocks closed at a 10-year high on Friday, capping their best week in two months, as chip-making and artificial intelligence stocks jumped after Beijing vowed to focus on technological self-sufficiency.

Policymakers' pledge to "resolutely" achieve economic targets this year also injected optimism into a market clouded by tariff uncertainty as Chinese and US leaders plan to meet next week in South Korea to defuse trade tensions.

The Shanghai Composite Index ended a volatile week up 0.7 percent, hitting its highest level since August 2015. The blue-chip CSI300 Index climbed 1.2 percent.

In Hong Kong, benchmark Hang Seng Index gained 0.7 percent to 26,160 points.

The tech gauge also rose 1.8 percent to 6,059 points.

On Thursday, China's Communist Party elite pledged more efforts to achieve technological self-reliance at the end of a four-day closed-door meeting known as a plenum.

Goldman Sachs said that setting technology and security as top priorities for China's growth strategy over 2026-30 reflects Beijing's long-term pursuit for "high-quality growth" and "high-level security".

China's chipmakers and AI stocks - key in China's power rivalry with the US- surged in response. The tech-focused STAR 50 Index shot up 4.4 percent. 

Semiconductor Manufacturing International (0981) jumped by 8 percent while Hua Hong Semiconductor (1347) rocketed 13.7 percent. 

The market was also buoyed by expectations of fresh stimulus.

"We reckon that, after the 4th Plenum this week, policy focus might be once again shifted to ensuring short-term growth stability and ending deflation," Nomura said in a note.

"Fiscal expansion will likely be stepped up, policy rates could be moderately cut, and arrears might be further cleared."

But consumer stocks dropped as investors expect few forceful measures to boost domestic demand. Financial and real estate shares also declined as the sectors were hardly mentioned in China's five-year plan.

Reuters and staff reporter