China Daily Briefing

SCMP Business reported CNOOC's net profit jumped 23.4% to a record high in the first half of 2026, driven by higher oil prices and increased production amid the US-Iran war. This is the clearest oil-transmission trade in the China universe: CNOOC is directly exposed to Brent pricing with China state-energy cost advantages intact. The record H1 print reframes the SOE energy sector as the momentum play right now — as US-Iran tensions sustain the oil premium, CNOOC's operating leverage means earnings beat risk is titled positive. Northbound flows into energy SOEs will be the PBOC-tolerated hedge against offshore tech pressure.

SCMP Business reported DeepSeek is finalising a funding round that values the Hangzhou-based AI company at approximately 500 billion yuan ($74B pre-money) ahead of a potential STAR Market listing in 2027. The valuation puts DeepSeek in conversation with global AI frontier models: at $74B it is larger than many established global tech firms. For A-share investors, this is the pipeline event to watch — a DeepSeek STAR Market listing would be the largest Chinese tech IPO in years and would pull institutional allocation from current platform names (BABA, JD, NTES) into AI-infrastructure plays. The pre-IPO funding round completion is the near-term catalyst to monitor.

SCMP Business reported Chinese investors rotating into dividend stocks from Shanghai Stock Exchange's 50 high-dividend index — old-economy names now outperforming chipmakers and AI hardware plays. The structural driver is bond yield compression: as China's 10-year yield stays near multi-decade lows, high-dividend A-shares are functioning as quasi-bonds. This is a significant capital allocation signal — it tells you the marginal domestic investor is de-risking out of AI momentum names and into yield-bearing SOE stalwarts. For global investors tracking China, this rotation is a headwind for CSI 300 tech-heavy growth but a tailwind for the financials and energy constituents that dominate large-cap China ETFs.