China Daily Briefing

Domestic and international brokerages are aligning on a thesis: China equities can extend gains in H2 2026, citing average full-year EPS growth for mainland-listed companies in the mid-teens, resilient export data despite tariff headwinds, and producer prices recovering as oil-cost pressure fades post Middle East de-escalation. BIDU's +6.25% session move validates the thesis in real time — AI platform names are the clearest beneficiary of PBOC's supportive liquidity stance (recent MLF operations maintained accommodative rate) and NDRC policy signals backing domestic tech spending. The risk is TCOM -1.79% today: if consumer demand for travel and services softens, the earnings upgrade cycle gets disrupted before it arrives.

Chinese self-driving start-up Momenta opened bookbuilding on Monday for a HK$5.89 billion (~US$751 million) listing on HKEX, offering 19.94 million shares at HK$295 — testing the market's appetite for EV-adjacent tech at premium valuations amid a broader China auto sales softness. Momenta's IPO is a directional test for HKEX's ability to absorb high-valuation China tech names that would previously have gone NASDAQ-listed; if subscription demand is strong, it reinforces the HKEX-as-primary-listing narrative that Beijing has been engineering via regulatory shifts since 2021. Southbound Stock Connect flows into HKEX on the IPO pricing date will be the tell for whether mainland retail and institutional money is willing to bid this valuation.

DeepSeek released a major V4 model upgrade aimed at sharply accelerating AI response generation (inference speed) while reducing serving costs per token — the competition among Chinese AI developers has shifted decisively from parameter count to serving economics. This matters for BIDU's AI Cloud thesis: as inference costs drop industry-wide, BIDU's Ernie Bot enterprise revenue becomes a gross-margin story rather than a volume-growth story, and the AI infrastructure capex cycle in China benefits SiC chipmakers and data centre operators. The structural read for KWEB constituents is positive — cheaper AI should expand Chinese enterprise AI adoption faster than any subsidy programme could.