China's Industrial profit Growth Accelerated Despite Middle East Tensions

Li Chen
27 May, 2026
Hong Kong

China's benchmark indexes hovered near recent levels, and investors bid up chip stocks. 

The Hang Seng Index declined 0.8%, the mainland-focused CSI 300 Index decreased 0.5%, and the rising hostilities in the Middle East weighed on the market sentiment. 

Broader market averages traded around the flatline, and chip stocks extended two-month gains following advances in overnight trading in New York. 

The AI investment boom in the U.S. and Europe positions Asian chipmakers as key beneficiaries. The U.S. companies alone have announced a commitment of at least $700 billion for AI infrastructure investment. over the next three years. 

Despite the U.S. conducting airstrikes targeting locations in Iran, hopes of easing Middle East tensions further boosted investor sentiment. 

Domestically, China's industrial profit accelerated in the first four months to April, as the boom in AI infrastructure investment boosted demand for steel, construction, electrical equipment, and advanced chips. 

Industrial profit between January and April 2026 increased 18.2% compared to a 15.5% rise in the first quarter from a year ago, respectively.

State-owned enterprises posted a 17.1% rise in profit to 827.2 billion yuan, joint-stock companies reported a 24% increase in profit to 1.8 trillion yuan, and private firms reported a 23.7% rise in profit to 651.1 billion yuan, according to the National Bureau of Statistics.

The rise in the industrial profit confirmed the resilience of the industrial sector despite the persistent geopolitical uncertainties linked to the tensions in the Middle East. 

In April industrial profit soared 24.7%, the largest monthly increase since November 2023, after a 15.8% rise in March, the statistical bureau confirmed.  

 

China Indexes and Stocks 

The Hang Seng Index decreased 0.8% to 25,385.34, and the mainland-focused CSI 300 Index fell 0.5% to 4,922.16. 

NAURA Technology Group declined 1.6%, SMIC advanced 0.2%, and Hua Hong Semiconductor rose 4.5%. 

Alibaba Group, Tencent Holding, and Meituan dropped between 1% and 3%.