The A-share market experienced a volatile decline on Wednesday morning, with the three major indices closing lower at the midday break. Over 4,300 stocks fell, with half-day turnover reaching 1.6 billion shares, an increase of 121.94 billion shares from the previous session.
As of the midday close, the Shanghai Composite Index was down 1.64%, the Shenzhen Component Index had fallen 3.7%, and the ChiNext Index dropped 4.71%. Market analysis points to three primary factors significantly impacting today's session.
First, overnight weakness in overseas technology stocks has unsettled sentiment in the A-share tech sector. The Nasdaq's decline and widespread pullback in semiconductor and AI-related stocks have dampened risk appetite for domestic electronics, communications, and computing power segments.
Second, profit-taking pressure continues to unwind in the previously crowded hot tech sectors. Recent consecutive adjustments in high-flying areas like semiconductors, memory, and advanced packaging have prompted a shift of market funds from high-level thematic plays to lower-level and defensive sectors.
Third, market confidence has turned cautious following the continuous adjustments, leading to insufficient short-term buying support. The previous session's loss of the 3900 level by the Shanghai Index, a nearly 3% drop for the ChiNext, and a more than 4% decline for the STAR 50 Index have created a bearish inertia affecting today's trading. Concurrently, market liquidity has contracted, intensifying competition among existing funds.
The previous session's A-share turnover fell to approximately 2.4 trillion yuan, indicating weak willingness for incremental funds to enter the market, which can easily amplify sector rotation and index volatility.
Notably, amidst the significant decline, several broad-based ETFs saw a marked increase in intraday volume. The E Fund ChiNext ETF (159915.SZ) recorded turnover exceeding 7.8 billion yuan, surpassing its full-day turnover from yesterday. The ChinaAMC STAR 50 ETF (588000.SH), the Huatai-PineBridge CSI 300 ETF (510300.SH), the China Southern CSI 1000 ETF (512100.SH), the Huatai-PineBridge CSI A500 ETF (563360.SH), and the China Southern CSI A500 ETF (159352.SZ) all saw turnover exceeding 3 billion yuan, approaching their respective full-day levels from the prior session.
On the sectoral front, the power generation sector bucked the downtrend and strengthened, with Guiguan Electric Power, Shennan Electric Power A, Leshan Electric Power, and Huayin Electric Power hitting their daily limit-up. The large financial sector saw a sudden intraday surge, with Xiangcai Co., Ltd. rocketing to a limit-up. Edge-side hardware concepts were active, with Mio Info Tech surging by the 20% daily limit. On the downside, the pharmaceutical sector collectively adjusted, with Zhaoyan New Drug, Lingkang Pharma, and Baihua Pharma falling by the daily limit. Computing hardware oscillated lower, with Demingli hitting its third consecutive limit-down, while Cambridge Technology and Accelink Technologies also fell by the limit.
Outlook for the Market
Gf Securities Co.,Ltd. believes the process of corrective declines in high-flying tech sectors is not yet fully concluded, and it will still take time for market sentiment to stabilize completely.
Key Performing Sectors
Power Generation Sector Surges
The power generation sector experienced a notable upward move, with Huayin Electric Power touching the limit-up, followed by gains in Leshan Electric Power, Shennan Electric Power A, Hangzhou Thermal Power, and Xichang Electric Power.
Commentary: On the news front, the National Energy Administration released data on electricity consumption for June. Total electricity consumption in June was 898.1 billion kWh, a year-on-year increase of 3.7%. Electricity consumption in the tertiary industry was 186.0 billion kWh, up 5.6% year-on-year; within this, electricity consumption for battery swapping/charging services and internet data services reached 14.8 billion kWh and 9.1 billion kWh, respectively, with growth rates of 57.1% and 41.4%.
Banking Sector Advances
The banking sector moved higher against the market trend, led by Qingdao Bank, with Lanzhou Bank, Chongqing Rural Commercial Bank, and Ruifeng Bank also rising.
Commentary: On the news front, Zhongtai Securities posits that the certainty of full-year bank performance will deliver steady returns for bank stocks in 2026, with short-term movements tied to market style. The sustained economic development model (strong policy resolve), robust corporate banking business, and persistently low risk appetite among residents are expected to drive a bottoming and recovery in net interest margins, with sustained revenue growth being a highlight, indicating strong earnings certainty.
Institutional Perspectives
Gf Securities Co.,Ltd.: Corrective Process in High-Flying Tech Sectors Not Yet Over, Full Sentiment Stabilization Requires Time
Gf Securities Co.,Ltd. views this round of adjustment as a concentrated release of combined internal and external disturbances. Externally, the overnight continued adjustment in the US memory sector, coupled with the unexpected rate hike by the Bank of Korea triggering a single-day plunge of over 7% in the Korean stock market and a sharp decline in leading Korean memory stocks, has directly transmitted the volatility in overseas tech sectors to the A-share market. Internally, during the semi-annual earnings verification period, some companies' growth fell short of expectations, triggering concentrated profit-taking that caused a chain reaction, further amplifying the adjustment in high-flying sectors. In the short term, the corrective process in high-flying tech sectors is not yet fully concluded, and it will still take time for market sentiment to stabilize completely. However, after consecutive declines, selling momentum is being rapidly released. Coupled with the approaching industrial catalyst of the World Artificial Intelligence Conference, sector sentiment is expected to find a repair window in the middle to late part of the month.
Founder Securities: Stabilization and Continuation of Structural Market Conditions Remain Highly Probable; Strategy Suggests Focusing on Stocks Over Index
Founder Securities believes the market decline stems from A-shares' own adjustment needs combined with a global tech sell-off. The adjustment process is also one of risk release. Some tech stocks with high earnings growth and relatively reasonable valuations have released selling pressure through this round of correction; once global markets stabilize, they could again become targets for capital pursuit. Despite the ongoing market adjustment, stabilization and the continuation of a structural market remain highly probable events. The operational strategy recommends "focusing on individual stocks over the index" to seize opportunities with higher certainty.
Oriental Securities: A-Share Style Shift Driven by Capital Rebalancing and Earnings Verification; Future Focus on Sustainability of Shift
Oriental Securities observes a visible reversal in A-share style, with significant divergence among different sectors. The tech sector, which was highly sought-after in the first half of the year, continues to decline, while the "old guard" sectors that suffered persistent capital outflows in the first half are showing strength. Previously, driven by the grand narrative of AI computing power and substantial capital expenditure by tech giants, sectors like electronics and communications enjoyed immense popularity. Under the influence of high valuations, earnings realization, and intense external volatility, these sectors have faced severe capital outflows. Meanwhile, the other side of the market is quietly recovering, with previously neglected or even persistently declining industries seeing capital inflows. Among them, the pharmaceutical and biological industry is leading the gains. Amid extreme market volatility, the A-share style shift is being driven by capital rebalancing and earnings verification. Future focus should be on the sustainability of this shift, with a strategic emphasis on defense and tactical trading.
From a technical analysis perspective, the support level for the Shanghai Composite Index after breaking below 3900 is near 3870. This level is also near the life line of the market trend since the "9.24"行情行情. A break below this level would mean a return to the major top of the consolidation range of the past decade, implying the failure of the market trend over the last two years; therefore, the probability of this analysis outcome is relatively low. In terms of allocation, the future market trend after this adjustment will likely still belong to the tech sector.
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