The three major A-share indices opened lower on June 23. After moving within a narrow range in the morning session, they declined before the lunch break. The market extended its losses and accelerated its decline in the afternoon, with the ChiNext Index at one point falling as much as 4.59%.
In terms of sector performance, industrial metals and energy metals stocks fell in tandem. The computing hardware industry chain saw a deep correction, with PCB and CPO sectors leading the decline. Gold, photovoltaics, AI applications, and commercial aerospace themes also posted significant losses. The healthcare and banking sectors bucked the downward trend.
At the close, the Shanghai Composite Index was down 1.37% at 4,106.25 points. The Shenzhen Component Index fell 3.17% to 15,854.2 points, and the ChiNext Index dropped 3.84% to 4,192.19 points.
According to Wind data, a total of 2,763 stocks rose across the Shanghai, Shenzhen, and Beijing exchanges, while 2,642 stocks declined, with 120 stocks closing flat.
The total turnover for the Shanghai and Shenzhen markets was 3,440.7 billion yuan, a decrease of 296.5 billion yuan from the previous trading day's 3,737.2 billion yuan. Specifically, the Shanghai market saw a turnover of 1,594.5 billion yuan, down 109.5 billion from the previous day's 1,704 billion yuan, while the Shenzhen market turnover was 1,846.2 billion yuan.
According to Dazhihui VIP data, 144 stocks across the two exchanges and the Beijing Exchange rose by more than 9%, while 86 stocks fell by more than 9%.
Healthcare and Pharmaceuticals Surge, Bank Stocks Among Top Gainers
In terms of sectors, healthcare and pharmaceuticals led the gains. Nearly 20 stocks, including Hengdi Pharmaceutical (301211), PharmaCore Biotech (300149), Saisheng Pharmaceutical (300485), Novozymes (688105), Hanbang Technology (688755), Staidson (300204), and Baili Tianheng (688506), hit the daily limit-up or surged over 10%.
Banking stocks were also among the top performers. Bank of Xi'an (600928), Bank of China (601988), and Bank of Wuxi (600908) rose more than 3%. China CITIC Bank (601998), Postal Savings Bank of China (601658), Chongqing Rural Commercial Bank (601077), and Bank of Communications (601328) gained over 2%.
The textile and apparel sector advanced, with stocks like Toread (300005), Hongdou Co., Ltd. (600400), Red Dragonfly (603116), George White (002687), and Xingye Technology (002674) hitting the limit-up. Mengjie Shares (002397) and Bairun Oriental (601339) rose more than 7%.
Non-ferrous metals suffered a sharp decline. Stocks including Shenglong Co., Ltd. (001257), Jiangxi Copper (600362), Tongling Nonferrous Metals (000630), Zhongxi Color (600259), Guocheng Mining (000688), and Zhaojin Gold (000506) fell by the daily limit.
The power equipment sector was among the biggest decliners. Defu Technology (301511), Nuode (600110), Tongguan Copper Foil (301217), One Stone (688733), and Xiangtan Electrochemical (002125) fell by the limit or dropped over 10%.
The defense and military industry sector underperformed. Feilihua (300395) and Xice Testing (301306) fell more than 7%. Torch Electronics (603678), CETC Sky (688818), Aerospace Electronics (600879), and Hongda Electronics (300726) declined over 4%.
Navigating the Style Rotation in the Short Term
Analysis suggests that overall, the simultaneous increase in volume and price indicates the market still has upward momentum in the short term. Structurally, the strength in some cyclical sectors effectively took over from the hard tech theme. This may lead to a pattern of healthy rotation between technology and cyclical sectors going forward, though whether this signals a style shift requires further observation. In the near term, it's crucial to navigate the rhythm of style rotation. While the market is currently undergoing a rebalancing of styles, the medium-term outlook for the AI industry's high-growth trend remains intact. As overseas tech giants release their interim reports from mid-July through the end of August, the pricing logic for the AI and tech direction is expected to return to fundamentals and earnings drivers.
Another perspective notes that with the easing of tensions involving Iran, the policy announcements from the Lujiazui Forum, and the conclusion of the Federal Reserve's meeting, external uncertainties have significantly diminished. The trend of household funds entering the market is accelerating, and both fundamentals and liquidity conditions are ripe for rotational gains. It is anticipated that the Shanghai Composite Index is likely to maintain a pattern of volatile upward movement. Attention should be paid to macroeconomic data, changes in overseas liquidity, and policy developments.
Further analysis posits that the recent concentration of trading in the tech growth theme is not solely driven by sentiment. Rather, in an environment of diverging corporate performance, capital is consistently flowing towards stocks with higher growth prospects and stronger earnings delivery capabilities. The structural divergence in China's economic fundamentals persists, with new industries like AI, advanced manufacturing, and the digital economy maintaining high growth, while the recovery in domestic demand for traditional consumption and the property chain remains relatively weak. This divergence in performance between the new and old economies is driving a continuous migration of capital towards high-growth sectors. In the short term, market focus is expected to tilt towards the verification of interim results. Pricing logic is likely to revert to fundamental drivers, potentially accelerating sector rotation. The focus should be on identifying sub-sectors with solid fundamental support.
Additional commentary indicates that as June draws to a close and interim report forecasts are about to be released, market participants, prioritizing safety, are likely to increasingly weigh earnings fundamentals. Regarding the rally in non-ferrous metals, the underlying driver is essentially resource demand related to AI. The market's focus has shifted from hardware itself to infrastructure and then to raw materials, representing a diffusion along the industry chain. The simultaneous rise in volume and price for the indices and major sectors has established the quality of the uptrend, laying the groundwork for future market movements. The internal differentiation within the tech sector, the faster pace of rotation, and the diffusion of investment themes all indicate that the market itself is becoming aware of the high crowding in the tech direction. Going forward, attention should be paid to changes in trading volume and the sustainability of sectors participating in the rotation.
Another view highlights that tech growth and the ChiNext/STAR Market sectors are leading the gains, with the STAR 50 and ChiNext indices establishing a new uptrend. Externally, the easing of tensions involving Iran and the conclusion of central bank meetings in the US, Japan, and Europe have marginally improved factors that were previously suppressing risk appetite. Subsequent trading related to interest rate hikes is expected to cool down as oil prices retreat. Internally, amid the global resonance of the AI tech rally, the ChiNext and STAR Market indices have reached new highs on heavy volume, formally establishing a new upward trend. Firstly, the simultaneous expansion in turnover and margin trading reflects the positive feedback effect of incremental capital entering the market. Secondly, the accelerated divergence between new and old economic drivers is channeling funds towards high-growth areas like AI and semiconductors (core stocks). Thirdly, the emphasis on "supporting excellence and supporting technology" at the Lujiazui Forum, which reinforces the allocation of financial resources towards "hard tech" sectors, further solidifies the logic of the main market trend.
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