The three major A-share indices showed a mixed performance in the morning session on July 1st. By midday, the Shanghai Composite Index had risen by 1.08%, the Shenzhen Component Index gained 0.41%, while the ChiNext Index fell by 0.39%. Over 4,500 stocks advanced across the markets. The combined half-day turnover for the Shanghai, Beijing, and Shenzhen markets reached 2.40 trillion yuan, an increase of 314.4 billion yuan from the previous session.
Market dynamics displayed a notable shift in style, with institutional rebalancing strategies gaining traction. While the technology sector maintained strength, traditional blue-chip stocks experienced a broad-based surge. The financial sector led the gains, with securities and insurance stocks at the forefront. Huaan Securities Co.,Ltd. (SHSE: 600909), Tianfeng Securities Co.,Ltd. (SHSE: 601162), and Guosheng Securities Inc. (SZSE: 002670) all hit the daily limit-up.
The pork concept continued its upward trajectory, with Tech-Bank Food Co.,Ltd. (SZSE: 002124), Shenzhen Kingsino Technology Co.,Ltd. (SZSE: 002548), Hunan New Wellful Co.,Ltd. (SHSE: 600975), and others rising by the limit. The liquor sector staged a rebound, with Anhui Golden Seed Winery Co.,Ltd. (SHSE: 600199) also hitting the limit-up. The memory chip concept remained strong.
On the downside, the PCB industry chain saw a full retreat. Concepts like MPO, optical chips, optical modules, and optical fiber cables declined. The inverter concept weakened, with a leading stock dropping over 10%.
The recent frequent activity in the securities sector, often seen as a market bellwether, has drawn attention. Analysts note that sustained high trading activity in the A-share market provides solid support for improving industry fundamentals. Current sector valuations are in a historically low range, presenting a favorable risk-reward profile for allocation.
Some institutions believe that while recent market structural trends have intensified, with funds heavily concentrated in the technology track, such extreme concentration may lead to a potential adjustment. The non-bank financial sector, with its improving fundamentals and low valuations, offers high allocation value and could present an optimal entry window if market rotations or structural adjustments occur.
Market Outlook for the Coming Period
Entering July, the highly polarized market driven by AI industry trends and capital flows in the first half of the year is facing new variables with the approach of the mid-year reporting season. As the market experiences a strong recovery, with active trading and supportive policies, and in the absence of new major negative external factors, confidence in a market with a solid floor and numerous structural opportunities is strengthening.
With July marking the start of the half-year earnings preview window, the core logic driving market hotspots is shifting from valuation expansion to the verification of actual earnings performance.
Key Sector Movements
1. Securities Sector Surges Higher: The financial sector strengthened, led by securities and insurance stocks. Huaan Securities Co.,Ltd. (SHSE: 600909), Tianfeng Securities Co.,Ltd. (SHSE: 601162), and Guosheng Securities Inc. (SZSE: 002670) hit the limit-up. Analysis suggests brokerages now hold significant equity in hard-tech companies through investment banking co-investments and direct equity investments. Coupled with historically low sector valuations, their technology-driven attributes are being increasingly recognized by capital.
2. Pork Concept Continues to Rise: The pork concept advanced further, with several related stocks hitting the limit-up. Reports indicate clear policy signals to stabilize the market, including a revised target for the breeding sow inventory. Industry capacity contraction is expected to gradually translate into reduced supply in the second half of the year, potentially improving the supply-demand balance.
3. Liquor Sector Rebounds: The liquor sector saw a震荡反弹, with Anhui Golden Seed Winery Co.,Ltd. (SHSE: 600199) hitting the limit-up. Analysis points to leading liquor companies' stable cash flows and attractive dividend yields, giving them income asset characteristics and long-term allocation value.
4. Memory Chip Concept Stays Strong: The memory chip concept remained robust. Research suggests the current memory super-cycle could be "higher and longer," with a significant catalyst being new CPU architectures driving demand.
Institutional Perspectives
One securities firm remains firmly optimistic about technology stocks, particularly AI, as the core market theme, believing their upward trend remains intact. While short-term funds may flow to lower-priced non-tech stocks, causing temporary convergence, the medium-term gap is expected to persist until the current tech investment cycle matures.
Another firm notes that while the medium-term trend for the technology direction remains, the market's focus in the second half of the year will be on whether the tech rally can continue or if a阶段性 style rebalancing will occur. The strategy advises against chasing highs, focusing instead on reasonably valued tech stocks whose performance hasn't been excessively priced in. Non-tech sectors like pharmaceuticals and non-bank finance may offer阶段性 opportunities in volatile markets, while caution is advised against blindly bottom-fishing unsteady defensive assets.
A third institution believes that with the market's strong recovery, active trading, and supportive policies, confidence has increased. However, external geopolitical disturbances, expectations for Federal Reserve rate hikes, and extreme capital concentration in hard-tech concepts may lead to反复震荡 in the near term. The core logic for market hotspots is shifting from valuation expansion to earnings verification as the half-year report preview window opens.
A fourth firm suggests the probability of a continuous decline in the short term is low, and investors can still participate in structural行情. The market is likely to轮动 between a narrowing focus within the tech sector and活跃 in lower-positioned sectors. Mid-term, July is seen as a transition phase where liquidity-driven logic will gradually give way to industry logic, moving from liquidity-driven to earnings-driven markets. However, the significant gains in the tech sector already price in high earnings expectations, and whether these materialize remains uncertain, potentially leading to heightened volatility in July, warranting a balanced allocation approach.
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