By Sangmi Cha and Iris Ouyang

(Bloomberg) -- China’s stock market rose Thursday after a weeklong break, as renewed enthusiasm for artificial intelligence and gold shares helped offset signs of weak consumer spending.

The onshore CSI 300 Index ended the day 1.5% higher. A gauge of Chinese shares listed in Hong Kong edged up 0.1%. The onshore yuan weakened 0.1% against the dollar.

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Gold and chip stocks led Thursday’s onshore gains. The materials gauge climbed 6.8%, driven by investor enthusiasm for gold miners such as Jiangxi Copper Co. and Shandong Gold Mining Co. The tech sub-index jumped 2.8%, boosted by Advanced Micro-Fabrication Equipment Inc.’s surge to a record high.

Lingering signs of economic sluggishness, reflected in underwhelming holiday spending, weren’t enough to dampen investor enthusiasm for AI. Some investors were hopeful that the global AI frenzy, fueled by companies touting OpenAI ties and sending tech stocks to fresh highs while China was closed, would spill over into Chinese markets.

“We’re seeing continued appetites for semiconductor wafer equipment localization, investment into AI related initiatives, robotics, and sustainable high-dividend yielding companies,” said Christopher Leow, chief investment officer of Singapore (head of Asia Ex-Japan equities) at Principal Asset Management.

Traders are also turning their attention to policy signals ahead of the Communist Party’s Oct. 20-23 meeting, where the blueprint for the 15th five-year plan will be outlined. The Trump-Xi meeting at the APEC summit in South Korea could add another catalyst if tariff talks resume.

The CSI 300 Index climbed for five straight months through September, its longest winning streak since 2017, led by enthusiasm over chip stocks after DeepSeek’s unveiling of an updated AI model and Huawei Technologies Co.’s plan to double output of its top AI chips.

Despite the rally, Chinese equities remain much cheaper than their peers. The MSCI China Index traded at below 13.5 times forward earnings — far below the S&P 500’s valuation at 23 times, according to Bloomberg-compiled data.

“If high-growth Chinese names, particularly in the internet space, can deliver on their potential earnings, they’re looking very attractive relative to global peers,” said Ian Samson, a multi-asset portfolio manager at Fidelity International in Singapore.

Weak Spending

Golden Week spending reflected consumers’ budget-conscious behavior. Travel and experiences remain a priority, but box office figures and airline demand disappointed.

Key retail and catering companies reported a 2.7% year-on-year sales increase during the eight-day holiday, according to Xinhua, citing Ministry of Commerce data. That compares with a 6.3% rise during the Labor Day break earlier this year.

The average spending per trip by domestic travelers during the break fell to 911 yuan ($127.85), according to Bloomberg calculations based on data released by the Ministry of Culture and Tourism on Thursday. That’s the lowest total for the holiday in post-pandemic years, even though the break was one day longer this year than 2024.

Growth in travel volume “was decent, but average spending was not going up,” Sandy Pei, senior portfolio manager for China equities at Federated Hermes, said.

Movie stocks, including Maoyan Entertainment and Damai Entertainment Holdings Ltd., fell Thursday in Hong Kong after Citigroup flagged weak ticket sales.

Macau saw a daily average of 143,000 visitors during the Golden Week, compared to its forecast of 150,000, local media outlet Teledifusão de Macau reported.

“The Golden Week data indicates continuing consumption weakness in China,” according to a note from Julius Baer. “This could be an excuse for profit-taking or imply continuing technology outperformance.”

Post-Holiday Package

Late last month, China introduced a 500 billion yuan ($70 billion) capital injection to spur investment, part of a long-anticipated “new financing policy tool.”

Markets expect a “favorable post-holiday policy package,” reflected in gains among brokerages, a sentiment-sensitive sector, said Daniel Tan, a portfolio manager at Grasshopper Asset Management.

In their October gathering, policymakers will prioritize boosting domestic demand and highlight “anti-involution” efforts aimed at curbing excessive competition, said Xingchen Yu, emerging markets strategist at UBS Global Wealth Management. Effective policies to tackle deflation could help unlock excess savings and boost consumption, he added.

Yuan Strength

The offshore yuan dipped 0.3% against the dollar during the holiday but remains up more than 2% this year amid growing appetite for Chinese assets.

The yuan rose 0.2% against the dollar in the offshore market Thursday, after the central bank set a stronger than expected daily reference rate for the currency.

Yields on China’s 10-year government benchmark bond fell two basis points.

“Resilience in exports and buoyant equity sentiment, supported by demand-side stimulus, should continue to lift the yuan,” said Fiona Lim, senior foreign-exchange analyst at Malayan Banking Berhad.

--With assistance from Cecile Vannucci, Chongjing Li, Neha D'silva and Fran Wang.

(Updates with closing stock prices in second paragraph.)

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