On Friday morning, China's A-share market saw mixed performance across the three major indices. By midday, the Shanghai Composite Index had fallen 0.3% to 3,043.45 points, while the Shenzhen Component Index rose 0.33% and the ChiNext Index gained 0.81%. The STAR 50 Index advanced 0.33%.
Market breadth was negative, with 1,637 stocks rising and 57 hitting the daily upside limit, compared to 3,771 declining stocks.
Sector performance varied significantly. CPO concept stocks rallied across the board, with multiple companies reaching their daily limit. Communications equipment, electronic components, and semiconductor sectors showed strong upward momentum, while real estate stocks continued their gains. Conversely, liquor stocks led the declines, with baijiu producers experiencing a notable pullback and innovative drug makers extending their losses.
Hong Kong markets declined collectively. The Hang Seng Index dropped 1.33%, the Hang Seng Tech Index fell 1.62%, and the Hang Seng Biotechnology Index declined 2.6%. Among individual stocks, WuXi AppTec fell over 6%, while JD Health and WuXi Biologics both dropped more than 4%. BeiGene and Innovent Biologics also registered declines.
**CPO Sector Surges on Strong Earnings** The communications equipment sector led the morning rally, with CPO concept stocks experiencing a broad surge. Multiple stocks hit their daily trading limits.
By midday, Zhongji Innolight had risen 3.39% to 837.02 yuan per share, while Eoptolink Technology climbed 7.66% to 578.66 yuan. TFC Optical Communication advanced 4.7% to 372.29 yuan.
Over ten stocks reached their daily limit. Ushine Photonics hit the 20% upside limit, while Accelink Technologies, Cambridge Technology, Kechuang Energy, Guanghe Technology, Coretronic, Vogo, and Anfu Technology all reached the 10% limit.
DSBJ gained 8.42%, and Shenzhen Fastprint Circuit Tech rose 9.72%. Companies including Changxin Memory, Sunway Communication, Shijia Photons, Changying Tong, and Lantech also posted gains.
The rally followed Zhongji Innolight's strong quarterly report released Thursday. The company reported first-quarter revenue of 19.496 billion yuan, nearly doubling year-over-year, while net profit surged 262% to 5.735 billion yuan.
Additionally, Goldman Sachs raised its price target for the stock from 791 yuan to 1,187 yuan. The investment bank expressed optimism about the optical communication network sector, citing data center architecture evolution from horizontal to vertical scaling, which drives higher bandwidth and connectivity demands, significantly expanding the total addressable market.
**Semiconductor Sector Maintains Strength** Semiconductor stocks continued their strong performance, with semiconductor materials companies showing notable gains.
XDF Electronics hit the daily limit, while Olion New Material surged over 11%. Companies including Tianyue Advanced, Kema Technology, Youyan New Materials, and Kaide Quartz all rose more than 4%.
This followed TSMC's first-quarter report showing revenue of $35.9 billion, up 40.6% year-over-year. Net profit jumped 58% to $18.2 billion, exceeding market expectations, with gross margin improving to 66.2%. TSMC noted that AI-related demand remains "very strong" and announced plans for global 3nm capacity expansion, forecasting full-year sales growth exceeding 30%.
**Liquor Sector Plunges, Kweichow Moutai Drops Over 4%** Baijiu sector leader Kweichow Moutai opened over 4% lower in early trading, touching the 1,400 yuan psychological level.
The broader baijiu sector followed suit, with Wuliangye and Shanxi Xinghuacun Fen Wine falling over 1%, and Luzhou Laojiao declining more than 2%. Yanghe Brewery, Gujing Distillery, Jinshiyuan, and Yingjia Gongjiu all registered losses.
This decline came after Kweichow Moutai reported its first-ever annual revenue and net profit decline since listing. The company announced on April 16th that 2025 revenue fell 1.21% to 168.838 billion yuan, while net profit attributable to shareholders dropped 4.53% to 82.32 billion yuan. Basic earnings per share were 65.66 yuan. The company proposed an annual dividend of 27.993 yuan per share.
Kweichow Moutai attributed the revenue decline primarily to product mix adjustments within its sauce-flavor series.