The MSCI China Materials Index has gained around 108% this year, on track for its strongest year since 2003
[HONG KONG] Chinese stocks look set for their strongest showing since 2017, after a technology-driven bull run broadened out to include companies from gold miners to drug makers.
The MSCI China Index has risen about 28 per cent this year, poised for a second consecutive annual gain. It is also en route to overtake the S&P 500 Index by the widest margin since 2017.
The inclusive rally captured the popular global themes of artificial intelligence (AI) and hot commodities, as well as local catalysts such as innovation and gaming. Meanwhile, notable laggards such as utilities and property developers offer a stark reminder of China’s entrenched housing woes and deflationary pressures.
“While the AI theme may keep a segment of the equity market rallying in 2026, one of the more likely catalysts for a broad-based rally looks to be another stimulus announcement,” said Oliver Blackbourn, a portfolio manager at Janus Henderson. “A clear plan for resolving the housing issue or driving increased consumer spending would likely have the most positive impact.”
Here are this year’s Chinese stock winners and losers:
Gold rush
Miners of metals from gold and silver to copper took the materials sector to the top spot among MSCI China’s sub-indexes, mirroring a worldwide trend of record-breaking commodity prices. The MSCI China Materials Index has gained around 108 per cent this year, on track for its strongest year since 2003, led by firms including China Gold International Resources, CMOC Group, and MMG.
Investors’ search for shelter from a weaker US dollar and escalating geopolitical risks sent gold and silver prices to all-time highs, while copper and aluminium benefited from tighter supply and demand tied to AI infrastructure. Beijing’s campaign to reduce industrial excesses further supported domestic prices.
“Materials have been one of the strongest-performing sectors, and the story goes well beyond short-term price moves,” said John Lin, chief investment officer of emerging markets value equities and China equities at AllianceBernstein. “Power shortages have become a key variable.”
Biotech supermarket
China’s healthcare sector shook off a four-year slump as domestic drug makers struck lucrative licensing deals with global pharmaceutical companies, including a mega deal for Pfizer to develop an experimental cancer drug from Shenyang-based 3SBio.
The sector hit a turning point after years of underperformance, driven by China’s rising status as a “supermarket” for innovative assets for global pharmaceutical firms, said Cui Cui, head of Asia healthcare research at Jefferies. “In the first 10 months of 2025 alone, Chinese biotechs captured a staggering 48 per cent of global out-licensing deal value.”
MSCI China’s healthcare sub-gauge is up around 50 per cent this year, on course for its best performance since 2020. Shares of 3SBio and industry peer Remegen have soared over 300 and 400 per cent, respectively.
Booming entertainment
A tough job market and weak income growth have prompted more Chinese to spend less on travel and resort to more affordable home entertainment. That was a boon for Internet giant Tencent Holdings and smaller firms such as online gaming developer Giant Network Group and AI-powered imaging platform Meitu Inc.
Fuelled by their gains, the MSCI China Communication Services Index has risen over 40 per cent this year, set for the most since 2007. Giant Network Group rose over 250 per cent, with Meitu up more than 130 per cent.
“There are signs that as household consumption adjusts under economic pressure, spending on digital entertainment is proving relatively resilient,” said AllianceBernstein’s Lin. “We saw genuine earnings growth in computer and mobile gaming firms.”
Housing, utilities laggards
China’s utilities and property sectors were the conspicuous underperformers in this year’s rally. MSCI China’s utilities sub-index has barely moved since 2025 began, while its real estate counterpart delivered a mere 1.4 per cent gain.
China’s power and gas firms, weighed by falling energy prices, also offer a glimpse into the country’s stubborn deflationary environment that’s a key obstacle to economic growth.
Meanwhile, Chinese developers also trailed the broader market significantly as the nation’s years-long property crisis showed no signs of abating. Shares of distressed major homebuilder China Vanke have fallen 36 per cent in Hong Kong this year, making the company one of the top losers among MSCI China members. BLOOMBERG
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