On August 6, the three major indices showed mixed performance, with the Shanghai Composite Index demonstrating relative strength and surpassing the 3900-point mark in the afternoon session. In contrast, the ChiNext Index experienced an initial rally that later faded. At the close, the Shanghai Composite rose 0.57%, the Shenzhen Component fell 0.24%, and the ChiNext Index declined 0.55%.
In terms of sector performance, the coal sector showed broad strength, while the electronic specialty gas concept continued to strengthen intraday. Digital currency concepts saw a sudden surge, PCB concepts rebounded, and the pharmaceutical commercial sector displayed active trading. On the downside, the power sector led losses. More than 2,700 stocks across the market advanced, with total trading volume on the Shanghai and Shenzhen markets reaching 2.53 trillion yuan, a decrease of 130.9 billion yuan from the previous trading day.
Today marked a "withdrawal day" for the week, and it was also a day of expected divergence after two consecutive days of upward momentum on Tuesday and Wednesday. Referring to the daily K-line chart of the Wind All-A Index, the market declined intraday but ultimately closed with a positive candle between the 20-day moving average and the 250-day moving average (annual line). This typically does not suggest a change in the rebound trend, but the annual line above represents a resistance level.
Analyzing the intraday price action and volume changes: From 9:30 to 10:30, the market opened lower and then moved higher, benefiting from buying on dips, but the broader market saw shrinking volume during this period. From 10:30 to 11:30, the index declined on expanding volume, indicating that more funds chose to exit (whether recent profit-takers or early dip-buyers taking profits), and the buying side's ability to support prices above the waterline was relatively weak. In the afternoon, the index fell to near the morning's low point before being supported again, and it edged slightly higher into positive territory towards the close.
Regarding individual stocks, from 10:30 to 13:40, the number of declining stocks steadily increased, peaking at nearly 4,300. During this period, both non-tech stocks that had been rebounding since mid-July and tech stocks that had just started their "oversold rebound" this week experienced some divergence. However, speculative sentiment remained in the market. By the close, Ally Luxury Group, which had just resumed trading, recorded its 10th consecutive limit-up (following a continuous limit-up streak from July 21 to 31 before a trading halt), making it the first ten-consecutive-limit-up stock of the second half of the year. From December of last year to January, Fenglong Stock and Shengtong Energy had achieved 18 and 14 consecutive limit-ups, respectively, representing the peak of the consecutive limit-up style at that time. Since the second quarter of this year, the trend-following style in the A-share market has generally been more dominant. Some argue that it was precisely the "whale fall" of tech stocks in July that allowed short-term capital to again seek profit opportunities in consecutive limit-ups. Therefore, the divergence seen today, while not immediately affecting the rebound trend, could introduce more variables in short-term rotation.
Finally, let's look at the sectors. The coal sector strengthened throughout the day, even surging on heavy volume in the afternoon. This significantly contributed to the Shanghai Composite Index's ability to reclaim the 3900-point level by the close. On the news front, on August 5, the thermal coal price index was raised across the board, with the 5,500 kcal grade reporting at 839 yuan/ton, an increase of 5 yuan/ton. The continued strength in coal prices directly boosted market expectations for the profitability of coal companies. Against the backdrop of the 2025 "anti-involution" policy strictly controlling coal overcapacity production, combined with systematically stricter safety supervision and production halts at some mines for rectification, the downward trend in domestic thermal coal supply-side output is expected to continue into the second half of 2026.
Precious metals and oil & gas, which are also resource-oriented sectors alongside coal, performed well in terms of gains but experienced significant intraday volatility. Their afternoon re-rally may have been connected to the synchronized strengthening of sectors like agriculture, real estate, and consumer, likely based on a defensive investment strategy.
As for the tech lines, sectors like "optical" (communications) and "chip" (components, semiconductors), along with the material sector that strengthened yesterday, were the most popular targets for bargain-hunting capital after opening lower in the morning. The rhythm of their rallies and subsequent pullbacks was largely consistent with the broader market's movements.
China Merchants Securities believes that entering August, the market style favors positioning for oversold rebounds in growth stocks. The current A-share market is still in its upward cycle. After the significant adjustment in July, the market may find it difficult to return to the previous unilateral trend, increasing the need for rebalancing. However, looking at August alone, the potential for further short-term upside in dividend-yielding assets may be limited. The firm noted that the August seasonal effect over the past 10 years shows that value-oriented style indices are relatively dominant during this month. However, the CSI 2000 Index and TMT sectors also have a relatively high probability of winning, with their odds second only to the financial index. Historically, in rebounds following significant A-sharpe market adjustments, growth indices like the CSI 1000 and ChiNext Index have shown higher odds and gains.
CITIC Securities pointed out that the AI computing power supply chain has entered a deep explosive phase where downstream demand is driving upstream capacity. Cloud giants have established strong commercial viability and certainty in AI applications, while Lumentum, a major upstream core optical components manufacturer, has seen its capacity potentially sold out well into 2028, revealing the scarcity and long construction cycle of underlying hardware support. This order lock-in, spanning from cloud software revenue growth to hardware infrastructure over several years, constitutes the most robust virtuous cycle within the current AI industry's climate.
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