On July 16th, the three major A-share indices opened lower collectively. After a brief recovery in the morning session, the declines narrowed significantly. In the afternoon, the market resumed its downward trajectory, with losses expanding notably. All three major indices at one point fell more than 2%.
From a sector perspective, semiconductors and the computing hardware supply chain continued their adjustment, with memory, advanced packaging, lithography machines, and CPO sectors leading the declines. Rare earths, coal, photovoltaics, lithium batteries, consumer electronics, and commercial aerospace concept stocks were also among the top decliners. AI application, major consumer, and medical services concept stocks showed strength.
At the close, the Shanghai Composite Index was down 1.85% at 3,882.41 points. The Shenzhen Component Index fell 1.97% to 14,488.65 points. The ChiNext Index dropped 2.95% to 3,692.46 points.
Wind data shows that 2,495 stocks across the Shanghai, Shenzhen, and Beijing exchanges rose, while 2,860 stocks fell, with 169 stocks closing flat.
The combined turnover for the Shanghai and Shenzhen markets was 2,403.6 billion yuan, a decrease of 167.6 billion yuan from the previous session's 2,571.2 billion yuan. Specifically, Shanghai's turnover was 1,124.2 billion yuan, down 102.1 billion yuan from the previous 1,226.3 billion yuan, while Shenzhen's turnover was 1,279.4 billion yuan.
According to DZH VIP data, 80 stocks across the two main boards and the Beijing Exchange rose by 9% or more, while 113 stocks fell by 9% or more.
Sectors in Focus: Agriculture Strong, Semiconductors Lead Declines
In terms of sectors, media stocks once led the gains, with Diansheng Co., Ltd. (300805), Huazhi Digital Media Co., Ltd. (300426), Zhigu Co., Ltd. (000676), Ruyi Film Co., Ltd. (002739), Shanghai Film Co., Ltd. (601595), and Huari Century Co., Ltd. (000892) hitting the daily limit-up or rising over 10%.
The agriculture, forestry, animal husbandry, and fishing sector remained strong throughout the day. Tiankang Biology (002100) rose over 6%, while Wens Foodstuff Group Co., Ltd. (300498), Bangji Technology Co., Ltd. (603151), Pulike Biological Engineering, Inc. (603566), Zhongchong Co., Ltd. (002891), and Muyuan Foods Co., Ltd. (002714) gained over 3%.
Commercial retail stocks strengthened in the morning session. Boshi Glasses Co., Ltd. (300622), Xinhua Department Store Co., Ltd. (600785), Telling Telecommunication Holding Co., Ltd. (000829), and Nanjiren E-commerce Co., Ltd. (002127) hit the limit-up or rose over 10%. Dalian Friendship (Group) Co., Ltd. (000679) and Ruoyuchen Co., Ltd. (003010) rose over 6%.
The semiconductor sector suffered another significant setback. Montage Technology Co., Ltd. (688008), Li Yang Chip Technology Co., Ltd. (688135), Shen Gong Co., Ltd. (688233), Essen Technology Co., Ltd. (688720), Hengshuo Technology Co., Ltd. (688416), Goke Microelectronics Co., Ltd. (300672), and Chengdu Sino Microelectronics Technology Co., Ltd. (688709) were among more than 10 stocks that hit the daily limit-down or fell over 10%.
Building materials stocks saw their losses widen in the afternoon. Sinoma Science & Technology Co., Ltd. (002080) and China Jushi Co., Ltd. (600176) hit the limit-down, while Honghe Technology Co., Ltd. (603256), International Composite Materials Co., Ltd. (301526), Shandong Fiberglass Group Co., Ltd. (605006), Shangfeng Materials Co., Ltd. (000672), and Kibing Group (601636) fell over 6%.
Machinery and equipment stocks were among the top decliners. Wuhan Jingce Electronic Group Co., Ltd. (300567), Shenkeda Semiconductor Equipment Co., Ltd. (688328), Bojei Co., Ltd. (002975), Huagong Tech Company Limited (000988), and Aerospace Hi-Tech Holding Group Co., Ltd. (603698) hit the limit-down or fell over 10%.
Market Outlook: Consolidation Likely to Continue in Short Term
One securities firm suggests that overall market performance remains below expectations. This is reflected, on one hand, in the significant negative feedback from the A-share technology sector against the backdrop of a rebound in overseas tech assets, indicating that short-term volatility in the hard tech sector has not eased, which may dampen market sentiment and limit the momentum for a broader market rebound and the sustainability of other sectors. On the other hand, the continuous contraction in total market turnover reflects relatively weak investor confidence. Therefore, in the short term, the market is likely to remain in a phase of consolidation and bottom-building. More positive signals, such as a significant increase in trading volume with a strong market rise, the three major indices reclaiming their 5-day and 10-day moving averages, or improved sustainability in leading sectors, are needed to confirm that the market possesses upward momentum. Until such signals emerge, investors are advised to maintain appropriate control over their positions, participate in market rotations with a focus on observing the consolidation pattern, and increase their market involvement only after positive signals appear. From a medium-term perspective, July is a transitional period for the market, which is expected to experience significant volatility. A balanced portfolio allocation is recommended.
Another securities firm believes the recent substantial correction in technology stocks has raised questions about whether the tech bull market has ended. It posits that the tech bull market is merely in a mid-term consolidation phase and is far from over from a medium-term perspective. However, it acknowledges that short-term market disturbances have increased, with the escalating situation in the Middle East being a factor that cannot be ignored.
A third securities firm views the short-term style rebalancing in the A-share market as essentially a correction in capital flows triggered by the resonance of internal trading congestion and external market volatility, noting that the underlying industry logic has not fundamentally shifted. The firm states that until the end of July, when major overseas cloud providers release their financial reports and capital expenditure guidance, capital flow factors will remain the core variable disturbing the market. In terms of allocation, it suggests prioritizing leading companies in the overseas computing power supply chain with strong earnings certainty and still-attractive valuations, as these offer a favorable risk-reward profile in the medium term. Investors are advised to moderately extend their holding periods and look beyond short-term fluctuations.
A fourth securities firm notes that influenced by sentiment from overseas tech stocks, the A-share market has once again entered a period of sharp volatility. Following the weakness in semiconductors, the pharmaceutical sector rose timely, with 21 pharmaceutical stocks hitting the daily limit-up or rising over 10%. Joinn Laboratories (China) Co., Ltd. opened at the limit-up, and the Innovation Pharmaceuticals ETF surged nearly 6% at one point. A noteworthy phenomenon is that the more volatile the market becomes, the more small-order funds, typically seen as representing retail investor trading behavior, tend to buy. This suggests that while institutional funds are temporarily controlling positions and realizing gains, retail investors are not amplifying panic but are instead continuing to act as a "stabilizer" for the market during adjustments. From a technical analysis perspective, the Shanghai Composite Index still has upward momentum, with this week's high expected around 3,970 points.
A fifth securities firm argues that the core market contradiction remains "overseas sentiment disturbance + internal rotation within themes" rather than a deterioration in domestic fundamentals. The shift of funds from crowded sectors like computing hardware and military aerospace to lower-valued cyclical blue-chips confirms the style rebalancing characteristic of the transition from "liquidity-driven" to "earnings-driven" in July. It continues to recommend a balanced approach to navigate high volatility: using high-dividend, low-valuation blue-chips as a foundation, focusing on the innovation pharmaceutical theme with its independent industry logic, remaining cautious about high-valuation tech hardware, and waiting for opportunities to buy on dips after volume contraction and stabilization.
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