On July 1st, all three major indices closed higher, with the Shanghai Composite up 0.72% and the ChiNext Index up 3.06%. In terms of sectors, multimodal AI concept stocks surged, with Kimi, ChatGPT, and AIGC leading the gains; robotics, CPO, memory, computing power leasing, and cybersecurity themes were also active. Banking stocks underperformed. Nearly 4,700 stocks across the market rose. The combined turnover of Shanghai and Shenzhen markets reached 2.54 trillion yuan, an increase of 199.1 billion from the previous trading day.
For the entire month, the major indices collectively fell, showing a trend of oscillation and adjustment. Both the STAR 50 and ChiNext indices fell by over 20%, the Shenzhen Component Index and CSI 500 fell by more than 15% for the month, while the SSE 50 Index saw a smaller decline. Dividend stocks were actively traded against the trend, while tech stocks experienced a collective adjustment.
Echoing the global market's rhythm, on the last day of July, A-share tech stocks finally saw a strong recovery. However, this sharp volatility can bring significant recovery gains while also hiding risks. For a stark example: if an investor sold tech stocks at the market's low point yesterday, then saw a large gap-up at the open today and got excited enough to buy back in, what would happen? They would likely encounter the pitfall of buying high and getting trapped, losing money twice.
Data from Flush shows that as of today's close, the individual stock sealing rate was only 46.92%, meaning the rate of limit-up breaks was as high as 53%. Some previously popular stocks opened with a one-word limit-up but quickly succumbed to selling pressure, breaking the limit and turning lower. A prime example is Shenzhen Techwinsemi Technology Co.,Ltd., which had led the oversold rebound on Thursday. This type of intraday price movement was not uncommon today.
From the stock selection data, there were as many as 1,341 stocks whose closing price was lower than their opening price. This may be because ultra-short-term trading focuses more on sentiment and chip gaming, where the A-share market's "unwritten rule" of selling on a gap-up is more favorable for locking in profits. Meanwhile, some investors' thinking, after a full month of adjustment, had shifted to "Sell the rebound and exit."
However, as a result, medium-term holders felt a strong recovery today. The next question to consider is: Is this tech rally a (oversold) bounce or a trend reversal? After a few more trading days, the market itself will reveal the answer. For today's intraday action, referencing the ChiNext Index's daily candlestick chart, it is clear that the 10-day moving average has been the upper boundary of the downward channel this month, acting as a resistance level. Today's intraday high has not yet managed to break through. The intraday pullback also indicates significant selling pressure above.
If we anchor on the sentiment impact from the performance of overseas markets, we might be able to "anticipate" the A-share market's reaction slightly, by one or two hours. For example, today, South Korea's SK hynix can be seen as the strongest "sentiment indicator." In the afternoon, its stock price in Seoul expanded its gains to 30%, hitting the daily limit—a point where many A-share investors learned for the first time that "foreign stock markets also have daily price limits." Driven by its surge, the Korea KOSPI index closed up 17.91%, setting a record for the largest single-day gain since data tracking began in 1980.
Before the South Korean market's rally, U.S. tech stocks had already surged overnight, breaking the recent cycle of "Korea, A-shares, and U.S. stocks following each other lower." Some analysts believe this is mainly due to two major catalysts. First, overseas tech giants are still increasing their AI computing capital expenditure, alleviating recent market concerns. The latest Q2 earnings report showed that Amazon raised its capital expenditure forecast for 2026 from the previous $200 billion to $220 billion, stating that the majority of this spending will be directed towards AI. Similarly, Google's parent company Alphabet raised its 2026 capital expenditure guidance to nearly $200 billion, with Meta, Microsoft, and other giants also seeing high growth in capex. Second, the "AI stock god" on Wall Street, whose hedge fund used high leverage, has been forced to unwind its position. Some views suggest that the clearing of these "blood-stained chips" marks the departure of forced sellers, quickly triggering "relief buying" that drove a significant rebound in AI stocks.
Given the interconnected logic and sentiment, as we enter the August trading month next week, could the "most difficult time" for tech stocks be coming to an end? Zhongtai Securities, in its August stock picks report, stated that looking ahead, tech remains the market's main theme and has entered a "sweet spot" for active positioning. The institution believes that: (1) On the global front, disturbances are gradually subsiding. U.S. tech giants are intensively reporting their earnings in July, with core companies like Microsoft maintaining strong capital expenditure, continuously strengthening AI infrastructure construction. This further validates the high-prosperity logic of the global AI industry, providing strong support for the domestic tech sector. South Korea's regulatory measures on leveraged ETFs have entered the latter half of their implementation, and their impact on the liquidity of global tech assets is gradually fading. Additionally, the Fed's July meeting maintained the interest rate unchanged. Although the lack of forward guidance creates uncertainty about the rate path, expectations for a rate hike have not significantly intensified, which will alleviate the valuation pressure on long-duration growth assets. The impact of the US-Iran conflict is stage-limited and lacks the foundation for sustained escalation, suggesting that overseas risk appetite is poised for a steady recovery. (2) On the domestic front, with policy support, indices face no systemic downside risk. The domestic regulator's intent to stabilize the market is clear and has not shifted. Multiple heavy-weighted ETFs held by Central Huijin maintain a net inflow trend. Even if the net inflow pace has minor fluctuations, the policy support has not weakened, building a solid defense line for the bottom of the market. (3) The probability of a major style rotation is low, and tech remains the market's main theme. There are three reasons: First, the economy's "K-shaped divergence" persists. AI-tech-related investment, production, and exports maintain high prosperity, while the recovery pace of residential demand is still slow. The fundamentals do not support a major style rotation, and the growth advantage of the tech sector is hard to replace. Second, policy places a high priority on tech innovation, with a very high policy stance. The drive for high-level technological self-reliance is continuously advancing, providing long-term policy dividends for the tech sector. Third, with CXMT's listing, YMTC completing its first phase of IPO tutoring, and Unitree Robotics' IPO registration taking effect, the acceleration of IPOs in the domestic hard-tech track means the industrial dividend is continuously being released. Furthermore, the CSRC's important goal for the year is to "resolutely prevent large fluctuations in the market." As tech's weight in the indices increases, it is poised to receive relatively solid support through market stabilization operations at the index level.
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