China's three major stock indices opened lower collectively on August 31st. The morning session saw both markets fluctuate at lower levels, with a recovery warming up before noon and continuing into the afternoon. The indices turned positive and climbed steadily higher through the afternoon session.
From a sector perspective, the AI application theme heated up in the afternoon, with Inspur Electronic Information, Unisplendour Corporation, and Cambricon Technologies driving the server sector. The coal and banking sectors steadily advanced, with Bank of China and China CITIC Bank hitting new highs, while Postal Savings Bank surged on heavy volume. Leading property developers came under notable pressure, with China Merchants Shekou and Binjiang Group leading the declines.
At the close, the Shanghai Composite Index rose 0.86% to 3,986.3 points; the Shenzhen Component Index gained 0.44% to 14,015 points; and the ChiNext Index added 0.42% to 3,438.68 points. According to Wind statistics, 3,179 stocks rose across both markets and the Beijing Stock Exchange, 2,213 fell, and 152 were flat.
Total turnover for both markets reached 2.131 trillion yuan, an increase of 29.3 billion yuan from the previous trading day's 2.1017 trillion yuan. Specifically, the Shanghai market saw turnover of 1.0143 trillion yuan, up 43.9 billion yuan from the previous day's 970.4 billion yuan, while the Shenzhen market recorded turnover of 1.1167 trillion yuan.
According to Dazhihui VIP data, a total of 137 stocks across both markets and the BSE rose by more than 9%, while 24 stocks fell by more than 9%.
Media stocks surged in the afternoon, while non-ferrous metals led the decline. In the media sector, stocks such as Chinese Online, Mango Excellent Media, Haikan Shares, Rongxin Culture, Huace Film & TV, and Longban Media saw gains of 10% or more, with over ten stocks hitting the daily limit.
The banking sector was strong throughout the session, with Qilu Bank rising over 6%. Postal Savings Bank, Bank of China, and Bank of Beijing each gained more than 4%, while Xiamen Bank, China Minsheng Bank, and ICBC advanced over 2%.
The computer sector was among the top gainers, with stocks including Huashi Technology, Heren Technology, Transwarp Technology, Huichen Shares, SIE Consulting, InSpur Electronic Information, and Lidiguang Optoelectronics hitting the daily limit or rising over 10%.
Non-ferrous metals led the losses, with Baiyin Nonferrous hitting the daily limit. Hunan Silver, Hunan Gold, Fuda Alloy, and Zhaojin Gold all fell over 5%, while Xiaocheng Technology and Pengxin Resources dropped over 4%.
The pharmaceutical and biotech sectors also declined notably, with Jiankai Technology, Wanbang Pharma, Tellgen Corporation, Yuhuan Hengyi, Shenqi Pharmaceutical, and Kaikai Industry hitting the limit down or falling over 10%.
The real estate sector opened higher but quickly reversed, sliding progressively lower as losses expanded. China Merchants Shekou fell over 8%, while ShenZhen SEZ Real Estate, Xiangjiang Holdings, Binjiang Group, and Jingneng Real Estate each dropped over 5%.
Analysts suggest the current A-share correction is nearing its end. Dongwu Securities research indicates that from a supply-demand balance perspective, the global market will face a supply-demand gap for all elements in 2026-2027. The firm is bullish on copper prices over the next two years, noting that resource companies will enjoy priority profits, while smelting margins are also expected to establish a bottom.
CITIC Securities noted that many sectors currently have solid earnings and favorable momentum, but lack visibility for near-term earnings forecast upgrades. This includes sectors like North American AI, domestic computing power, non-ferrous metals, energy storage, and innovative drugs. Consequently, valuations are oscillating within a fixed range, driving the characteristic of accelerated sector rotation. Investors are advised to be cautious when optimistic narratives dominate, and to view valuation-shrinking risks as potential entry points. Historically, such periods favor value and reversal factors. Therefore, in non-AI areas, CITIC recommends allocating to assets with relatively cheap valuations and potential for earnings forecast upgrades, such as airlines, copper, spandex, MDI, and energy storage. In the AI sector, it suggests continuing a more balanced and reasonably valued allocation, including upstream uranium mines and electronic-grade glass cloth, midstream servers and gas turbines, and downstream cloud service providers.
Industrial Securities stated that the actual earnings growth from this year's semi-annual reports exceeded expectations. In the disclosed reports, the business conditions for all A-shares and non-financial A-shares continued to improve, with earnings growth rates both reaching double digits. As of August 29th, with 97% of reports disclosed, the year-on-year growth rates for net profit in the first half of 2026 were 16.86% for all A-shares and 16.70% for all non-financial A-shares. The highlight of this earnings recovery is not just the growth rate, but also the broadened scope. Beyond the TMT and resource sectors boosted by AI and price increases, more broadly defined high-end manufacturing, export chains, and some pro-cyclical industries also show signs of high earnings growth or improvement. Therefore, even though a tight global liquidity environment suppresses valuations, earnings remain a crucial support for the A-share market to stabilize overall and for specific sectors to show structural highlights. Looking ahead, strong internal earnings growth and the continued expansion of the recovery scope will support the market and offer more actionable allocation opportunities.
Zhongtai Securities believes that this round of A-share adjustment is nearing its end. While short-term volatility may persist, the downside risk has noticeably diminished. Concurrently, there is insufficient evidence to suggest a trend reversal in the AI cycle. Looking forward, market bottom signals are increasing, and the focus of technology allocation may shift towards sustainable models.
Founder Securities observed that over the past two months, the market first fell and then initiated a rebound from oversold conditions. The duration of the decline and the rebound periods are nearly identical, suggesting the market's bottoming-out process is entering its latter half. Entering September, economic activity gradually moves into its peak season, and the window for a new round of incremental policy measures is opening. On the liquidity front, the direction of the Fed's monetary policy will become clearer in September and throughout the year. Given high US Treasury yields, the probability of a Fed rate hike is low. Regarding risk appetite, the A-share market's turnover has fallen by about half from its peak, which is generally considered the volume level for the bottom of this adjustment, with the index's bottom becoming increasingly clear. Structurally, the core determinant of the index's trajectory remains technology, similar to the new energy rally from 2021 to 2022. The report suggests paying attention to the potential of sub-sectors that may hit new highs and drive overall market sentiment in tech.
This information is republished from a partner media source and is provided for reference purposes only. It does not constitute investment advice, and investors should operate at their own risk.
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