The A-share market experienced a narrow and relatively weak trading session today. By the close, the Shanghai Composite Index stood at 3905.20 points, up a marginal 0.04%, while the Shenzhen Component Index gained 0.87% and the ChiNext Index advanced 1.43%. At the individual stock level, the market was evenly split, with roughly 2,500 stocks rising against more than 2,800 declining. Trading activity was subdued, with combined turnover on the Shanghai and Shenzhen exchanges reaching approximately 1.9 trillion yuan, a contraction of over 200 billion yuan compared to the previous session.
By sector, gold-related equities, mining, non-ferrous metals, and telecommunications led the gains, while biomedicine, aquaculture, and building materials lagged. This week, the market initially rallied before reversing, with sentiment swinging dramatically from exuberance to a rapid chill. On Monday, the Shanghai index opened higher and climbed steadily, extending the rebound from Friday's late session, barely pulling back intraday, and closing with a strong bullish candle that broke above the prior week's high, signaling a potential upward breakout. On Tuesday, the index hit resistance at the previous gap-down zone, reversed lower with an intraday dip of over 1%, but sentiment recovered in the afternoon, closing just shy of a key psychological level. Wednesday saw a dramatic shift, influenced by Japanese and South Korean markets, as the Shanghai index gapped down and continued to slide. Despite intermittent attempts to bounce, all failed, risk appetite deteriorated rapidly, tech stocks led the decline, and signs of panic selling emerged late in the session. Thursday and Friday were characterized by low-level consolidation, with off-market funds largely adopting a wait-and-see stance.
This week's volatile swings left many investors questioning whether the rebound has ended and whether further upside remains. Our view is that range-bound trading will dominate the market for some time. Amid the interplay of earnings verification, chip digestion, and external disruptions, a sustained one-way trend is unlikely to emerge quickly. The index is more likely to complete chip exchange and expectation rebalancing through repeated fluctuations within a range, with opportunities arising from structural differentiation rather than broad-based beta rallies. The oversold bounce logic has largely played out, and the market is transitioning into a phase of base-building and consolidation, awaiting fresh consensus and renewed sentiment.
On the chip front, after two months of significant volatility, substantial trapped positions and profit-taking positions have accumulated. The increase in floating chips has directly raised the difficulty of restarting a trend market, as both capital and sentiment consensus require extended periods of digestion. The higher dispersion of holding costs amplifies bull-bear divergence; any modest index uptick triggers simultaneous profit-taking and trapped-position selling pressure, further complicating trend resumption. Neither institutional nor retail funds have formed a unified directional view, and market sentiment remains volatile, meaning consensus will only rebuild after prolonged consolidation and thorough chip exchange.
On earnings and valuation, mid-year report disclosures are most concentrated in late August. During this window, prior consensus expectations built on future potential, industry logic, and policy catalysts will undergo systematic recalibration through core financial data such as revenue, profit, orders, and cash flow. Targets that meet or exceed expectations will see their logic reinforced; those merely in line will see limited valuation expansion; and those missing expectations face the risk of their original thesis being invalidated, with downward valuation pressure. Earnings delivery thus becomes the core driver of valuation reshaping in this phase.
From a technical perspective, the index faces multiple overhead resistances, with the annual moving average and the 4,000-point psychological level suppressing bullish momentum. At least two key barriers exist: the annual line representing long-term average cost and trend strength (which was lost again, underscoring its strength), and the 4,000-point level, a historical battleground and psychological threshold. Combined, these create concentrated selling pressure, making a breakthrough without sustained volume significantly harder than in typical rebound phases.
For investment strategy, adopting a "trade the range, wait for the trend, and prioritize earnings over valuations" approach is advisable. Given the stock-market dynamics of rapid sector rotation and range-bound index movement, premature bets on a new trend should be avoided. Respect market signals, maintain moderate overall positions with cash buffers, and capture structural opportunities within the range. The index is likely to oscillate around key levels, gradually climbing and using time to complete chip exchange. At the sector level, funds will rotate rapidly rather than concentrate in a single track. When tech faces selling pressure, capital tends to rotate into undervalued consumer, dividend, or cyclical value sectors for safety; once tech completes turnover, funds return to earnings-backed hardcore directions. This seesaw effect and structural rebalancing are expected to define the market's near-term character.
Regarding sector allocation, with the mid-year report window, earnings become the key metric for differentiation, and valuations serve as a safety cushion. We recommend reducing reliance on pure concept speculation or simple oversold rebound logic, and instead raising the weight of earnings certainty. When sentiment is high, capital inflows easily inflate valuations and overextend expectations; but when industry logic faces strict earnings tests or liquidity tightens, capital exodus can trigger sharp, disorderly declines. Therefore, focus on hardcore tech leaders with genuine technical barriers, full order books, and consistent earnings delivery. In the transition from "theme investing" to "fundamental verification," robust profit growth should be used to digest valuations, securing more stable long-term returns in an increasingly differentiated market.
This week, gold extended its trend advance following a breakout from a consolidation triangle. Overall, the long-term bullish case for gold remains solid, and any pullback may present a favorable opportunity to add positions. On the technical side, the downtrend line that had capped gold prices for about six months has been decisively breached, reflecting strong and unified bullish momentum. Additionally, today's sharp rally suggests the formal formation of a bull-flag pattern, making the 5,000-point target a reasonable, not overly aggressive, assumption. The breakout of this key resistance, which had pressured gold since the year's high, is not a mere short-term spike but a concentrated manifestation of accumulated bullish strength after prolonged consolidation. Following bottoming and washout phases, a powerful bullish candle breaking higher is often viewed as a continuation signal in an uptrend.
On the fundamental front, recent gold selling pressure stems from a combination of forced sales by some central banks facing currency pressures and staged profit-taking by long-term funds. On one hand, some emerging market central banks, grappling with currency depreciation and reserve gaps, have been compelled to sell gold to shore up foreign exchange liquidity, with concentrated sales temporarily pressuring prices. On the other hand, long-term allocators who built positions earlier and accumulated substantial gains have begun phased profit-taking after prices reached psychological targets, with commodity funds and ETF holdings declining consecutively as bullish capital retreats, further weakening upward momentum. However, these short-term pressures are largely temporary, and the long-term strategic allocation logic of central banks increasing gold holdings remains fundamentally unchanged, underpinning gold's long-term investment case.
In terms of market expectations, investor concerns largely center on the possibility of the Federal Reserve entering a rate-hike or balance-sheet-reduction cycle, which would weigh on gold. However, we believe that under capital market liquidity constraints, the Fed's tightening space may be narrower than expected. The fiscal sustainability red line posed by the U.S. federal debt exceeding $35 trillion, the financial fragility of regional banks and commercial real estate, and weak underlying economic momentum fundamentally cap the scope for rate hikes. Moreover, the current inflation rebound is primarily supply-driven from geopolitical shocks, limiting the effectiveness of rate hikes. Combined with political constraints during the election cycle, the Fed is unlikely to tighten aggressively. Looking ahead, medium-to-long-term factors—including rising U.S. reflation and even "stagflation" risks, global sovereign debt overhang, and elevated geopolitical systemic risks—provide sustained support for precious metals.
For investors, the Gold ETF (518800), which tracks the AU9999 price on the Shanghai Gold Exchange, is worth monitoring. Additionally, the Gold Stocks ETF (517400) may benefit from higher gold prices and also merits attention.
Risk disclosure: Investors should fully understand the difference between regular fixed-amount investment in funds and savings methods such as installment deposits. Regular fixed-amount investment is a simple way to guide long-term investing and average out costs, but it does not eliminate the inherent risks of fund investing, does not guarantee returns, and is not an equivalent savings substitute. Equity ETFs/LOFs/feeder funds are securities investment funds with relatively high expected risk and return, with expected returns and risk levels higher than hybrid funds, bond funds, and money market funds. Fund assets invested in the STAR Market and ChiNext may face unique risks arising from differences in investment targets, market mechanisms, and trading rules; investors are advised to take note. The short-term performance of sectors/funds listed is solely supplementary material for the article's analysis, for reference only, and does not constitute a guarantee of fund performance. Short-term performance of mentioned stocks is for reference only and does not constitute stock recommendations or forecasts/guarantees of fund performance. The above views are for reference only and do not constitute investment advice or commitments. If you wish to purchase relevant fund products, please pay attention to investor suitability management regulations, complete risk assessments in advance, and purchase fund products with risk levels matching your own risk tolerance. Funds carry risks; invest with caution.
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