Auto, AI drive China stocks higher; Citi upgrade buoys sentiment

Chinese shares edged up on Thursday, buoyed by regulatory support for the auto sector and renewed optimism in AI-related stocks, while Citi upgraded China equities, citing improved earnings trends and structural growth themes.

** At market close, the Shanghai Composite index 000001 climbed 0.4% to 3,516.83, and China's blue-chip CSI300 index 3399300 was up 0.7%.

** Leading gains were AI-related shares 9930713 that added 1.8% and the info tech sector 0000915 that jumped 2.1%, as news that Nvidia NVDA will ramp up supply of H20 chips to China lifted sentiment.

** Auto stocks 9931008 edged up 1.7% after authorities pledged to regulate the excessive competition and intense price wars in the electric vehicle (EV) industry.

** In Hong Kong, the benchmark Hang Seng Index HSI closed flat but held near a four-month high.

** The biotech HHSHKBIO and healthcare sectors (.HSCIH) rallied more than 5% each after U.S. President Donald Trump dialled down his harsh tone towards China, offering fresh optimism about the trade deal prospects.

** Analysts at Citi upgraded China equities to "overweight", citing comparatively improved earnings outlook, reasonable valuations, and structural themes such as AI and corporate governance reforms.

** Internet names are among the top picks, as recent headlines about resumed sales of AI chips by U.S. companies to China could be incrementally positive, the analysts said.

** "While the domestic economic picture remains mixed, a potential acceleration in support for domestic demand could be an upside catalyst," they said in a note on Thursday.