On July 3rd, the three major A-share indices retreated after an initial surge, with the ChiNext Index rising over 2% in early trading before fluctuating and declining in the afternoon session.
At the close, the Shanghai Composite Index gained 0.37%, the Shenzhen Component Index rose 0.64%, and the ChiNext Index edged up 0.07%.
Advancing stocks significantly outnumbered decliners, with over 3,800 shares rising across the markets.
The combined turnover for the Shanghai, Shenzhen, and Beijing exchanges was 3.17 trillion yuan for the day, a reduction of 256.7 billion yuan from the previous session.
Key Market Movements
On the positive side, the precious metals sector continued its strong performance.
Zhaojin Mining Industry Co., Ltd. and Chifeng Jilong Gold Mining Co., Ltd. hit their second consecutive daily limit-up, while Shandong Gold International Mining Corporation Limited also reached the limit-up.
Xiaocheng Technology Stock Co., Ltd., Sichuan Gold Co., Ltd, Zhongjin Gold Corp., Ltd., and Western Region Gold Co., Ltd. were among the top gainers.
The humanoid robotics concept also saw sustained gains.
Wolong Electric Group Co., Ltd. and Estun Automation Co., Ltd. surged to the daily limit-up, following earlier limit-ups for over 40 stocks including Rifa Precision Machinery Co., Ltd., Lead Intelligent Equipment Co., Ltd., Jintuo Technology Co., Ltd., and Landai Technology Group Co., Ltd.
In the afternoon, the memory chip concept continued to rise.
Deli Memory Technology Co., Ltd. hit an intraday limit-up, with Ingenic Semiconductor Co., Ltd., Puya Semiconductor (Shanghai) Co., Ltd., Longsys Electronics Co., Ltd., Heshun Technology Co., Ltd., BIWIN Storage Technology Co., Ltd., and Shannon Semiconductor Co., Ltd. all climbing.
The PCB (Printed Circuit Board) concept fluctuated but trended higher.
Shennan Circuits Co., Ltd. reached the limit-up, with Wus Printed Circuit (Kunshan) Co., Ltd., Shengyi Technology Co., Ltd., Avary Holding (Shenzhen) Co., Limited, and Guanghe Technology Co., Ltd. following suit.
Areas of Weakness
On the downside, semiconductor materials and equipment sectors continued to adjust.
The advanced packaging concept moved lower, the glass substrate concept showed weakness, and the optical fiber and cable concept fluctuated and probed lows.
The AI application sector pulled back, while chemicals, pork, e-commerce, agriculture, airport and shipping, and photovoltaics, among other sectors, also weakened.
Catalysts for the Rebound
Three major positive developments contributed to the market's rebound.
First, the weaker-than-expected U.S. June non-farm payrolls report led markets to believe the Federal Reserve may pause its rate hikes as a result.
Second, while Meta's business model adjustment initially spooked global tech stocks, a subsequent report from semiconductor research firm SemiAnalysis argued the market misinterpreted Meta's "computing power rental equals cost-cutting" move.
The firm's July 3rd report stated it believes Meta's data center and computing power procurement will accelerate, not slow down, with capital expenditures in 2027 being "staggeringly high."
Third, on the evening of July 2nd, numerous companies announced share buyback or increase plans, signaling confidence to the market through concrete action.
Stocks involved included Dazhong Mining Co., Ltd., Tianshan Aluminum Group Co., Ltd., Chint Power Systems Co., Ltd., Sany Renewable Energy Co., Ltd., Wangfujing Group Co., Ltd., and Haier Biomedical Co., Ltd..
Among them, Dazhong Mining Co., Ltd. plans to repurchase shares worth 400 million to 800 million yuan.
Additionally, many listed companies issued positive profit forecasts, involving firms such as Guanggang Gases & Energy Co., Ltd., Qinghai Salt Lake Industry Co., Ltd., Alpha Animation and Culture Co., Ltd., Zhejiang Yonghe Refrigerant Co., Ltd., Huafon Chemical Co., Ltd., Taotao Vehicles Co., Ltd., and Furong Technology Co., Ltd..
Market Outlook and Institutional Views
Looking ahead, China Everbright Securities Co., Ltd. believes that given the ongoing valuation reassessment in overseas tech sectors, continued uncertainty around Federal Reserve monetary policy, and the market's entry into the mid-year earnings verification window in July, profit-taking pressure on high-valuation sectors is gradually emerging, making it difficult to change the market's cautious sentiment.
In the short term, the market may continue to experience thin-volume, weak fluctuations with structural divergence.
CSC Financial Co., Ltd. noted in a research report that market sentiment is currently at a relatively low level within a bull market context.
It stated that after the sentiment index fell to around 55 in early June, the market began a low-level rebound, consistent with historical patterns where rebounds often occur when the sentiment index drops to the 50-55 range in a bull market.
Following significant volatility, the sentiment index approached 55 again on June 26th, triggering another rebound.
Overall, current sentiment is low for a bull market, and indicators reflecting market strength/weakness are also at low levels, suggesting strong short-term rebound momentum, particularly for previously oversold sectors which may see rotational rebounds, aiding sentiment recovery.
Wang Fang, Co-Director of the Research Institute at Zhongtai Securities Co., Ltd., stated that AI innovation is gradually permeating from the cloud to the edge and device side, continuously driving the semiconductor industry upward.
She noted the sector's performance is supported by solid profitability, not just conceptual hype.
The industry saw a slight recovery in 2024, with a significant rebound expected in 2025.
In Q1 2026, the electronics sector's revenue grew 29% year-on-year, with profit growth reaching 71%, significantly outpacing revenue growth.
Most sub-sectors, including semiconductors, consumer electronics, PCBs, and passive components, achieved both revenue and net profit growth, indicating continuously improving fundamentals.
Simultaneously, industry inventory levels are within a safe range, laying a solid foundation for future development.
In contrast, traditional downstream demand from mobile phones, laptops, and automotive electronics continues to weaken, further highlighting the core driving role of the AI sector.
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