Market Overview: Central Bank Outlines Eight Key Priorities
The People's Bank of China has clarified its next major work priorities, focusing on comprehensive use and timely adjustment of monetary policy tools. Regarding the steady resolution of key area risks, the meeting proposed: continuing financial support for the risk resolution of local government financing platform debt, promoting the market-oriented transformation of these platforms; strengthening macroprudential management and the financial stability guarantee system, enriching the macroprudential and financial stability management toolbox, correcting and blocking the accumulation of financial market risks, and maintaining the stable and healthy development of financial markets; effectively utilizing the two capital market policy tools to support monetary policy; enhancing the effectiveness of deposit insurance functions; steadily and orderly advancing risk resolution in key regions and institutions; and intensifying efforts to combat illegal financial activities. On steadily deepening financial reform and opening up, the meeting required: actively and prudently carrying out central bank currency swap and local currency settlement cooperation; supporting and facilitating more foreign institutions to participate in the issuance of panda bonds; coordinating the development of the offshore RMB market, supporting Shanghai in enhancing cross-border financial and offshore financial service capabilities, and consolidating Hong Kong's position as an offshore RMB business hub; deepening reforms to facilitate cross-border trade and investment and financing; advancing the construction of the RMB cross-border payment system, increasing international cooperation in cross-border payments, and improving the digital RMB cross-border infrastructure.
Oil Market: Iran-US Negotiations Send Oil Prices Plunging
International oil prices fell sharply after US President Donald Trump called off a planned attack on Iran and announced new negotiations starting Monday. The October Brent crude futures contract dropped by as much as 7.3%, reaching $81.55 per barrel. Brent had surged nearly a quarter in July, marking its largest monthly gain since March. WTI crude oil was trading near $80 per barrel. Trump stated on Air Force One on Sunday that he cancelled the large-scale attack on Iran after Middle Eastern allies, including Saudi Arabia, requested he pursue a deal instead. According to an earlier post on Truth Social, Trump said he agreed to cancel the strike “provided a deal can be reached quickly” to reopen the Strait of Hormuz as soon as possible.
ETF Market: Record Inflows Exceed 460 Billion Yuan in July
In July, over 460 billion yuan flowed into stock ETFs, shattering previous records. Historically, monthly net inflows into stock ETFs had exceeded 100 billion yuan nine times, but never surpassed 200 billion yuan, with April 2025 recording 193.159 billion yuan. The July figure far exceeded this previous record. Broad-based ETFs regained favor with capital. Specifically, the STAR 50 ETF (China Asset Management) saw net inflows of 402.87 billion yuan, the CSI 300 ETF (Huatai-PineBridge) had 347.38 billion yuan, and the ChiNext ETF (E Fund) brought in 338.41 billion yuan. Additionally, the CSI 1000 ETF (China Southern), CSI 500 ETF (China Southern), A500 ETF (Huatai-PineBridge), CSI 1000 ETF (China Asset Management), Shanghai Composite Index ETF (Fullgoal), and STAR 50 ETF (E Fund) all saw net inflows exceeding 10 billion yuan. Beyond broad-based ETFs, several industry-themed ETFs also attracted capital, with semiconductor-themed ETFs being the most popular. In July, the STAR Semiconductor ETF (China Asset Management) saw net inflows of 299.27 billion yuan, the Semiconductor Equipment ETF (Guotai) had 103.19 billion yuan, and the Semiconductor Equipment ETF (E Fund), STAR Semiconductor Equipment ETF (Huatai-PineBridge), and STAR Chip ETF (Harvest) all saw net inflows exceeding 6 billion yuan.
Fund Risk: Nearly 300 Medium-Risk Funds Plunge Over 30% in a Month
Amid the sharp July correction in the tech sector, over one-third of the 790 actively managed equity funds that fell more than 30% retained an R3 medium-risk rating. The severe short-term drawdown was not reflected in risk level adjustments. This revealed a significant lag in fund product risk ratings, which are greatly out of step with actual volatility. Industry insiders noted that the risk ratings of these funds failed to timely reveal the downside risk of net asset values, showing obvious lag. Although the fund risk classification system has been in place for years, its implementation remains unsatisfactory. Standards and frequencies vary between institutions, leading to a phenomenon of “different ratings for the same fund.” Furthermore, institutions lack the motivation to make proactive adjustments, turning ratings into a mere compliance formality. To effectively improve the validity of risk ratings, practical obstacles must be removed and conflicts of interest addressed.
Market Strategy: CITIC Securities Says Correction is Mostly Over
According to CITIC Securities, the current A-share market correction is more about adjusting crowded trades rather than a Korean-style deleveraging shock. This is reflected in three points: the overall leverage situation is relatively safe; the current decline in margin financing is not large compared to typical deleveraging cycles globally; and the ETF market shows continuous capital inflows, with tech ETFs providing ample liquidity support. While local liquidity pressures remain, particularly in some non-core AI stocks, the impact on core holdings is largely resolved. The probability of a broad recovery in August is increasing, but it is not merely a simple rebound from oversold conditions. The negative narrative for non-AI sectors is marginally improving, and the capital environment supports appropriate recovery. The recommendation is to increase allocations to energy/chemicals, non-ferrous metals, non-bank financials, and innovative drugs, while within the tech sector, focusing on holdings during any rebound.
Foreign Investment: QFII Adjustments Show "Concentration" Trend
Since the second quarter, foreign capital has been actively positioning in A-shares. By the end of Q2, the market value of northbound holdings via the Shanghai and Shenzhen Stock Connect programs exceeded 3 trillion RMB for the first time. The adjustment trends of foreign institutions highlight the growing appeal of China's artificial intelligence (AI) industry chain. Analysts suggest the momentum for Chinese stock market gains is likely to continue. In Q2, the combination of AI industry opportunities and the resilience of the RMB exchange rate boosted foreign demand for A-share allocations. As of August 2, 572 foreign institutions had conducted 4,161 research visits to A-share listed companies this year, with 17 institutions being particularly active, each conducting over 50 visits.
US Tech Giants: Earnings Season Triggers Sell-Off
Recently, US tech giants Apple and Meta reported revenue growth, but their stock prices fell sharply. Conversely, Microsoft and Amazon also posted strong results and were met with capital追捧. The market is pricing these companies differently. As the AI narrative moves into the second half of 2026, the phase of "unconditional faith" is ending, with investors scrutinizing the efficiency and certainty of returns on investment. This "earnings slump" triggered by over-extrapolated expectations and capital expenditure anxiety among US tech giants raises the question of whether it will spill over into the A-share market.
Housing Policy: Provident Fund Usage Scope Expanded
The State Council executive meeting has approved a draft decision to amend the "Regulations on the Management of Housing Provident Funds," explicitly aiming to better leverage the functions of the housing provident fund, broaden the scope of withdrawal and use, expand system coverage, and improve management service efficiency to better meet residents' diverse housing consumption needs. Industry insiders see this as a shift from a single "home purchase financing tool" to a comprehensive housing security and livelihood support platform covering the entire lifecycle of buying, renting, repairing, and maintaining a home. This year, multiple cities have adjusted their housing provident fund policies, with broadening the scope of use being a key element. Data shows that in the first half of the year, over 560 real estate-related policies were introduced nationwide, with over 300 involving housing provident funds, far exceeding the same period in 2025. This has become the most frequently issued and widely covered policy tool in this year's housing market regulation, with over 130 regions expanding the scope of withdrawal for purposes like paying property fees, home renovations, purchase taxes, parking spaces, and urban renewal projects.
Currency Market: Trump Confirms US-Japan Joint Yen Intervention
US President Donald Trump confirmed on August 2 that the US is helping Japan boost the yen. He stated that the yen has been weakening and Japan requested some assistance. Trump mentioned that Japan has been good to the US, except for the Pearl Harbor attack.
Housing Market: Shanghai Leads New Home Price Growth in July
Data released by the China Index Academy on August 1 shows that the average price of new homes in 100 cities reached 17,229 yuan per square meter in July, up 0.26% month-on-month and 2.09% year-on-year. The new home market shows structural upward trends, driven by core cities like Shanghai, Shenzhen, Hangzhou, and Chengdu. The second-hand housing market continues its adjustment, with the average price in 100 cities falling 0.44% month-on-month to 12,584 yuan per square meter, a slight widening of the decline from June. Only 8 of the 100 cities saw a month-on-month increase in second-hand home prices.
Public Fund Performance: First Seven Months See Major Shakeup
With the end of July, the performance picture for public equity funds in the first seven months of 2026 is clear. The extreme structural market in A-shares has undergone a phase adjustment, with funds focused on the previously booming AI and semiconductor growth sectors experiencing significant net value retracements. The number of funds achieving doubled returns has shrunk drastically, with only two products from E Fund managing to retain their doubled returns. As of July 31, only two actively managed equity funds had year-to-date returns exceeding 100%, down from 199 at the half-year mark. The top 20 spots for the first seven months were dominated by tech and AI-themed funds, but most experienced significant net value retracements in the past month as capital was taken off the table at high levels. Meanwhile, dividend, pharmaceutical, and small-mid cap stocks have seen a window for contrarian recovery.
Topic of the Day: Ailiju's Nine Consecutive Limit-Up Streak and Trading Halt
Ailiju announced plans to acquire at least 77.08% of a semiconductor memory testing equipment company, officially entering the hot semiconductor sector. Riding the wave of semiconductor domestic substitution and AI computing industry boom, the story of a "traditional flooring company crossing over into semiconductors" quickly ignited market sentiment, with capital flooding in and pushing the stock price to consecutive limit-ups. However, the company began issuing risk warnings. On July 30, the company issued a notice of severe abnormal stock price fluctuations and risk warnings, noting the huge price increase and irrational speculation risks, and clarifying that only a letter of intent had been signed, not a formal agreement. On July 31, the company announced a trading halt for verification, as its stock price had hit limit-up for nine consecutive trading days from July 21 to July 31, with a cumulative gain of 135.77%. The stock will be halted from August 3, 2026, pending the release of a verification announcement.
Topic of the Day: E-Bo Technology's Net Profit Surges 15 Times
E-Bo Technology's half-year report showed a net profit surge of 1,561.55% year-on-year. The company's Q2 net profit was 0.52 billion yuan, a 350% increase quarter-on-quarter. Despite the strong earnings, the stock price fell by 30% in July, and the company gained 12,000 new shareholders in Q2.
Topic of the Day: NIO's Three Brands Combined Sales of 35,000 Vehicles
In July 2026, NIO delivered 35,934 vehicles, a 70.98% year-on-year increase. However, breaking down the sales structure reveals issues. The NIO brand delivered 20,008 units, Onvo 10,155, and Firefly 5,771. The total of 35,934 vehicles is the sum of three brands, actually down 11.49% month-on-month. Compared to peers, Li Auto sold 30,468 units, meaning NIO's three brands combined only sold about 5,000 more units than Li Auto.
Industry Highlights: Nuclear Power and AI Continue to Drive Market Trends
Major news in the nuclear power sector indicates total investment will exceed 170 billion yuan, with institutional research on nuclear power concept stocks intensifying. QFII adjustments show a 'concentration' trend, with foreign institutions favoring China's AI industry chain giants. Companies are reporting strong earnings, with the industry chain experiencing a comprehensive boom. The price of high-end computing power continues to rise, with multiple companies entering the 'token factory' space. The mandatory 3C certification for charging piles is now in effect, raising industry entry barriers and accelerating industry consolidation. Two companies have announced share buyback plans, intending to cancel all repurchased shares.
Market Strategy: Ten Major Institutions' Outlook
Ten major institutions are bullish on the market outlook, citing profit elasticity release and a more solid foundation for market gains. They favor high-profit growth stocks. The view is that the adjustment is mostly a correction of crowded trades, with the probability of a broad recovery in August increasing. The recommendation is to increase allocations to energy/chemicals, non-ferrous metals, non-bank financials, and innovative drugs.
New Stocks This Week: Two IPOs Available
This week (August 3-7), there are two new stock subscriptions. One is on the STAR Market (科创板) and one on the Beijing Stock Exchange (北交所). The Beijing Stock Exchange IPO, JieLi Technology, has a subscription price of 18.86 yuan per share, with a P/E ratio of 14.99 times, compared to the industry average of 66.02 times. JieLi Technology is an integrated circuit design company focused on system-on-chip (SoC) solutions for Bluetooth audio/video, smart wearables, and smart IoT terminals. The IPO is expected to raise 622 million yuan. The other IPO, Pinzhun Laser, will start subscription on August 7 on the STAR Market.
Key Announcements: Trading Halts, Resumptions, and Major Events
Trading halts: Ailiju (603221), Jiaoda Onlly (600530), Banyan (300246), *ST Development (000838).
Trading resumptions: Xintian Technology (300615), Beiken Energy (002828), ST Yedao (600238), ST Ruibeka (600439).
Xintian Technology: The company's controlling shareholder will change to Shenzhen Yuanqi, and the stock will resume trading on August 3.
*ST Development: The company's pre-restructuring investor selection process is ongoing, leading to a trading halt starting August 3.
Huaxin Construction Materials: The company plans to acquire HPI equity in two phases, with an initial consideration of about $527 million for a 67.623% stake.
BYD: July new energy vehicle sales were 419,200 units, including 411,100 passenger cars.
E-Bo Technology: First-half net profit increased by 1,561.55% year-on-year.
BAIC BluePark: July auto sales for its subsidiary increased 122.06% year-on-year.
Great Wall Motor: July auto sales were 108,100 units, up 3.54% year-on-year.
Chaoyang Technology: First-half net profit decreased by 85.87% year-on-year.
Huazhijie: First-half net profit decreased by 46.78% year-on-year.
Tianan New Materials: The company plans to repurchase shares worth 30-60 million yuan, with a portion for cancellation and the rest for employee stock ownership plans.
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