Shanghai Stocks Touch Decade Highs as Alibaba Leads AI Surge

Shanghai and Hong Kong stocks rose, with Alibaba driving gains after notable AI advancements. China's stock market saw a 10% jump in August, and positive sentiments were also boosted by the prospect of a U.S. interest rate cut and challenges faced by foreign chipmakers.

Shanghai stocks nearly reached their highest levels in a decade on Monday, fueled by strong gains from Alibaba. The tech giant's AI-driven growth reinforced investor confidence in Chinese innovation, especially as the Shanghai market increased 10% in August, its best performance in nearly a year.

The advances buoyed the Shanghai Composite Index and Hong Kong's Hang Seng Index, with Alibaba surging 17%. Abraham Zhang, Chairman of China Europe Capital, emphasized the significance of Alibaba's AI breakthroughs for China's AI industry.

Investment in Chinese chipmakers gained strength, especially after the U.S. tightened export restrictions, while Chinese biotech firms also saw a boost. Despite potential economic headwinds, analysts remain optimistic about China's stock market performance, noting company valuations are modest and retail excitement appears restrained.

(With inputs from agencies.)