Following the Dragon Boat Festival, the A-share market saw a mixed session on its first trading day, June 22nd, with indices gaining strength in the afternoon after a weak morning.
The overall market showed stronger performance in major indices than in individual stocks, with combined trading volume across the Shanghai, Shenzhen, and Beijing exchanges approaching 4 trillion yuan.
Although most sectors rose, the market's ability to generate profits for investors was limited, with fewer than 3,000 stocks closing higher and capital clearly concentrating in leading shares within technology, securities, and metals sectors.
Market observers noted that today's performance resembles a volume-driven rebound following a recovery in risk appetite, and cannot be simply interpreted as confirmation of a full-fledged bull market.
If financials provide a stable foundation while technology and resource stocks continue to rotate, indices may still have upward momentum; if the rally relies solely on a single-day surge in brokerages, the market may revert to structural divergence.
It is advised to maintain core positions in technology while avoiding chasing brokerages too aggressively.
Volume Surges to 3.76 Trillion Yuan
Indices were sluggish in the morning but rallied in the afternoon.
The Shanghai Composite Index closed up 1.78% at 4,163.10 points, the ChiNext Index rose 2.52% to 4,359.39 points, and the Shenzhen Component Index gained 2.13%.
The CSI 300 Index increased by 2.39%, the SSE 50 Index by 2.86%, the STAR 50 Index by 1.96%, and the BSE 50 Index by 0.5%.
Alongside the significant index gains, trading volume expanded notably.
The combined daily turnover for the Shanghai, Shenzhen, and Beijing exchanges rose by 430.3 billion yuan to reach 3.76 trillion yuan.
As of June 18th, the balance of margin trading and securities lending across the three markets increased to 2.97 trillion yuan.
In terms of sector performance, brokerage concepts, futures-related shares, base metals, chemical raw materials, and virtual robots saw strong gains, while automotive and robotics sectors declined.
However, the market's profit-making effect was subdued, with only 2,916 stocks closing higher, including 151 that hit their daily limit-up.
Conversely, 2,468 stocks closed lower, with 30 hitting their daily limit-down.
Among active stocks, 49 had a trading volume of at least 10 billion yuan, predominantly technology stocks but also including securities, chemical, and metals sectors.
East Money Information Co., Ltd. closed up 12.74% at 20.97 yuan per share, CITIC Securities Co., Ltd. gained 7.83% to 28.64 yuan per share, China Molybdenum Co., Ltd. rose 8.03% to 21.65 yuan per share, and Zijin Mining Group Co., Ltd. advanced 2.53% to 30.44 yuan per share.
In the communication equipment sector, Zhongji Innolight Co., Ltd. closed up 1.06% at 1,382.33 yuan per share, Hengtong Optic-Electric Co., Ltd. gained 8.22% to 120.13 yuan per share, Accelink Technologies Co., Ltd. rose nearly 4% to 276.08 yuan per share, Zhongtian Technology Co., Ltd. increased by 5.45% to 59.63 yuan per share, while Eoptolink Technology Inc., Ltd. edged down 0.26% to 579.97 yuan per share.
In the semiconductor sector, GigaDevice Semiconductor Inc. closed up 9.65% at 689.70 yuan per share, JCET Group Co., Ltd. hit the daily limit-up at 91.33 yuan per share, Semiconductor Manufacturing International Corporation gained 3.48% to 145.59 yuan per share, Tongfu Microelectronics Co., Ltd. rose 4.37% to 71.25 yuan per share, Demingli increased by 3.52% to 737.07 yuan per share, Advanced Micro-Fabrication Equipment Inc. China advanced 3.54% to 372.74 yuan per share, while Cambricon Technologies Corporation Limited fell 3.35% to 1,456.99 yuan per share.
In the power equipment sector, Contemporary Amperex Technology Co., Limited closed up 4.45% at 408.98 yuan per share, Sungrow Power Supply Co., Ltd. surged 11.21% to 163.46 yuan per share, and EVE Energy Co., Ltd. gained 5.36% to 70.23 yuan per share.
In the electronic equipment manufacturing sector, Montage Technology Co., Ltd. closed up 3.76% at 280.05 yuan per share, Longsys rose 6.64% to 616.16 yuan per share, while Lens Technology Co., Ltd. fell 3.51% to 53.81 yuan per share and Sunway Communication Co., Ltd. declined 7.57% to 99.32 yuan per share.
Among the 31 primary Shenwan industries, only beauty & personal care, conglomerates, automotive, and machinery & equipment declined, with the rest closing in positive territory.
Real estate, household appliances, national defense & military industry, and pharmaceuticals & biotech saw modest gains.
The phenomenon of capital crowding into the technology sector eased somewhat, with 15 primary Shenwan industries rising more than 1%.
Electronics, communications, and computer sectors gained approximately 2%, while the non-bank financial sector surged 6.84%, with stocks like Caitong Securities Co., Ltd., Changjiang Securities Company Limited, GF Securities Co., Ltd., China Securities Co., Ltd., and New China Life Insurance Company Ltd. hitting the daily limit-up.
The nonferrous metals and basic chemicals sectors both rose over 4%, while power equipment, building materials, media, petroleum & petrochemicals, and coal sectors also performed well.
Eighteen nonferrous metals stocks hit the daily limit-up, including Zhongjin Lingnan Nonfemet Company Limited, Yuguang Gold and Lead Co., Ltd., Chihong Zinc and Germanium Co., Ltd., Luoping Zinc & Electricity Co., Ltd., China Tungsten and Hightech Materials Co., Ltd., Yongshan Lithium Industry Co., Ltd., Jinduicheng Molybdenum Co., Ltd., Xiamen Tungsten Co., Ltd., and Ningxia Orient Tantalum Industry Co., Ltd..
The basic chemicals sector saw a wave of limit-up gains, with 29 stocks hitting the ceiling, including Power Diamond Co., Ltd., Ruifeng High-Material Co., Ltd., and Shiming Science and Technology Co., Ltd. rising by the 20% limit.
Market Breadth Expands Slightly
Despite trading volume nearing 4 trillion yuan and indices and sectors generally rising, the market's profit-making effect was limited.
How should investors interpret this market performance, and what signals does it release?
In analysis, GeShang Fund researcher Bi Mengman noted that today's strength in heavyweight stocks over individual stocks directly reflects capital concentrating in leading targets, with small and medium-cap stocks lacking sufficient buying interest.
The increase in volume today was driven by the reallocation of existing funds combined with a small amount of incremental capital, rather than broad-based capital inflows across the entire market.
The market has entered a phase of structural trends, with capital favoring stocks with high industry prosperity and earnings certainty.
Small and medium-sized stocks lacking policy catalysts, weak interim report expectations, and poor liquidity are being continuously marginalized, with on-market capital actively avoiding weaker targets.
Chen Xingwen, Chief Strategist at Blackstone Capital, believes this is not an absence of profit-making effects but rather a profound "restructuring of capital aesthetics."
The afternoon rally was by no means an emotional impulse but a clear signal of medium- to long-term capital entering the market.
In terms of sector performance, technological self-reliance is the safety baseline, consumption recovery is the breakthrough for domestic demand, non-bank finance is the dividend carrier of capital market reforms, and nonferrous resources are strategic chips in the restructuring of the global supply chain.
Behind the data of 2,916 rising stocks lies a market transitioning from an immature phase of uniform rises and falls to a mature state of "concentration in leaders and survival of the fittest."
This differentiation is not a risk but a sign of health; not a fragmentation but a convergence of consensus.
Wang Zheng, General Manager of Shangyi Fund, analyzed that the morning session still showed strong indices but weak individual stocks, with a noticeable recovery only in the afternoon.
Therefore, today's performance more closely resembles a volume-driven rebound following a recovery in risk appetite and cannot be simply interpreted as confirmation of a full-fledged bull market.
The strong performance in brokerages is attributed to three main reasons: first, sustained high market turnover has improved expectations for brokerage businesses like brokerage services, margin trading, and proprietary trading; second, following the Lujiazui Forum, positive policy signals regarding capital market reform, medium- to long-term capital market entry, and system optimizations for the STAR and ChiNext boards have boosted valuation repair expectations for the non-bank financial sector; third, the brokerage sector was previously relatively undervalued with modest valuations, making it an easy target for capital allocation as a "market sentiment recovery" play once risk appetite rebounds.
Wang further analyzed the broad sector gains, noting that beyond the previous technology growth theme, the logic of catch-up rallies in financial and undervalued sectors is beginning to emerge.
The current situation is more like "the technology theme remains unchanged, but market breadth has expanded somewhat."
Previously, the market mainly traded around high-growth directions like AI, computing power, and semiconductors.
Today's strength in brokerages, insurance, and metals indicates that capital is starting to focus on index elasticity and valuation repair.
However, whether the medium-term theme will shift depends on whether subsequent turnover can be maintained and whether financials can sustain their performance, rather than a one-day surge.
Key Market Factors to Monitor
Following the Dragon Boat Festival, A-shares rose with increased volume, with indices performing well but profit-making effects limited.
How will the A-share market perform in late June, and what factors should investors pay attention to?
Fang Lei, Chief Strategy Investment Officer at Xing Shi Investment, stated that in the short term, many factors that previously pressured market sentiment have been resolved.
The Iran-US peace talks have opened a window for the repair of global risk appetite, while industry fundamentals trends and policy catalysts provide strong support for the technology sector.
The performance of the technology theme also has a strong driving effect on overall market sentiment, suggesting that market sentiment may continue to recover.
Zhang Pengyuan, a researcher at Paipaiwang Wealth, cautioned that under the dual resonance of internal policy support and external geopolitical easing, the pattern of a structural bull market is expected to continue.
However, investors should be wary of volatility risks brought by extreme short-term differentiation.
With ample liquidity maintaining turnover at the 3 trillion yuan level, the probability of a significant index pullback is low, but one must guard against staged profit-taking in the technology theme after consecutive strong gains and potential style rotation from high to low valuations.
Chen Xingwen further pointed out that in the short term, A-shares are still influenced by three intertwined factors.
First, the direction of the Federal Reserve's monetary policy and marginal changes in China-US relations constitute the "ripple effect" of external volatility.
Second, the "moment of truth" during the intensive interim report earnings disclosure period will accelerate the matching of valuations and profits.
Third, the pace of domestic fiscal policy implementation and the landing of "anti-involution" policies will determine the slope of domestic demand recovery.
In Bi Mengman's view, the short-term market overall maintains a structurally volatile but strong pattern, with faster sector rotation and continued differentiation within the main theme.
Three factors will influence A-shares in the short term: first, external geopolitical situations and Federal Reserve monetary policy expectation disturbances; second, the concentrated disclosure window for interim report earnings forecasts; and third, seasonal liquidity fluctuations at month-end.
Wang Zheng reminded investors that while the short-term market can be viewed somewhat positively, blindly chasing highs should be avoided.
The focus for the subsequent market lies in three signals: first, whether turnover can continue to be maintained at high levels; second, whether financial stocks like brokerages and insurance can form sustainability; and third, whether the technology theme shows significant capital outflow during financial sector rallies.
Allocating to Tech or Non-Tech Sectors?
This year, the characteristic of capital crowding into technology has been evident, while non-tech sectors like major consumption and pharmaceuticals have remained sluggish.
However, today, while capital flowed into technology sectors like electronics and communications, it also surged into non-bank finance, consumption, pharmaceuticals, metals, and resources.
For investors, how should they position themselves going forward?
Wang Zheng suggested that if financials provide a stable foundation while technology and resource stocks continue to rotate, indices may still have upward momentum; if the rally relies solely on a single-day surge in brokerages, the market may revert to structural divergence.
Operationally, maintaining some offensive positioning is advisable, but a more balanced allocation is suitable, retaining core positions in technology while avoiding chasing brokerages too aggressively.
How to choose between technology and non-technology directions? Bi Mengman further analyzed that in the short term, within the technology sector, computing power and hardware remain relatively strong, while pure thematic application ends experience increased volatility.
Metals, resources, non-bank finance, and consumption, as rotating support lines, take turns strengthening, with capital switching back and forth between growth, value, and cyclical sectors, potentially facing slight pullback pressure by month-end.
Technology is the core theme for the year, possessing sustained allocation value and serving as the core offensive position in a portfolio.
However, timing, selecting leaders, and diversification across subsectors are all key to portfolio return elasticity.
Non-technology directions possess staged entry value, such as non-bank finance, suitable as a value base allocation, positioned as a defensive anchor for the portfolio, but with weaker long-term upside potential compared to technology growth.
Metals and resources sectors can be allocated in small positions for swing trading but are not suitable for long-term heavy holdings.
Operationally, Bi Mengman advised investors to avoid frequent intraday trading during periods of rapid market rotation, as frequent turnover will continuously erode returns.
Stock selection should prioritize leading liquidity stocks in each sector, targets with positive interim report earnings forecasts, and stocks where valuations match industry prosperity, while avoiding small and medium-sized stocks with poor liquidity and expected earnings losses.
Chen Xingwen recommended allocating assets with the philosophy of "trading time for space."
First, non-technology directions are by no means "untouchable" but should be embraced with "strategic patience."
Upstream cyclical sectors like nonferrous metals and chemicals are benefiting from the dual catalysts of "anti-involution" and the bottoming out of the Producer Price Index (PPI), with rising price expectations resonating with capacity reduction.
These sectors are like "dormant volcanoes," suitable as the "ballast" of a portfolio.
The technology direction is the "spear for offense," requiring a shift from "theme speculation" to the identification of "earnings realization."
Additionally, new consumption tracks (IP, pet, service consumption) within domestic demand consumption, new energy and national defense & military industry within advanced manufacturing, and high-dividend assets under a dividend strategy together constitute the balanced beauty of a "barbell" allocation.
Chen Xingwen believes investors should completely abandon a short-term gaming mentality, viewing position management as an "art" rather than "arithmetic."
It is suggested to lock the core position (60%) into the main logic of technology growth and advanced manufacturing, allocate the satellite position (30%) to the recovery elasticity of upstream cyclical and domestic demand consumption, and keep the remaining 10% as cash reserves to cope with volatility.
Mingyu Asset also stated that in an environment where industry fundamentals have a high impact on the market, the strong trend in the AI industry, which has high crowding but gradually realized orders and profits, may continue.
Non-AI sectors like real estate and consumption may require more positive changes and significant narrative shifts to break out of their weak patterns.
It is recommended to continue focusing on specific directions within the AI industry chain with clear price increase expectations and certain prosperity, such as memory, optical modules, semiconductor equipment, and AI materials.
Additionally, attention can be paid to industry-prosperous areas with relatively low crowding, such as commercial aerospace and robotics.
From a medium-term perspective, various assets are worth attention.
Fang Lei stated that on one hand, the AI industry trend has not shown obvious signs of slowing down.
As the interim report earnings expectation window approaches, it is advisable to focus on subsectors with stronger earnings certainty and relatively reasonable valuations.
On the other hand, some traditional core assets lacking short-term capital attention also present opportunities for fundamental recovery and already possess high medium- to long-term investment value.
Zhang Pengyuan firmly believes in the medium- to long-term logic of the hard technology theme.
As the interim report earnings disclosure window approaches in July, market pricing logic will accelerate its return to fundamentals.
Subsector leaders in AI computing power and semiconductors, which possess high prosperity and earnings realization capabilities, are expected to continue enjoying the premium of capital crowding.
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