A broadly positive session unfolded across Chinese stock markets on July 31, with all three major A-share indices posting solid gains, driven upward by notable strength in the computer and media sectors.
The ChiNext board surged over 3%, while the computer and media sectors emerged as the top performers. The main catalyst for the rally was a sharp rebound in overseas technology stocks. On Wall Street overnight, the Nasdaq 100 index jumped 3.36%, and the Philadelphia Semiconductor Index soared over 8%. This was fueled by strong earnings from Microsoft, whose Azure cloud business grew 43% year-over-year, and Amazon raising its AI capital expenditure forecast to $220 billion. Additionally, CNBC reported that a well-known AI-focused hedge fund, Situational Awareness, was forced to liquidate its entire public stock portfolio after suffering losses on its AI infrastructure holdings. The market interpreted this event as a "clearing event," suggesting that the forced selling's conclusion may indicate a near-term bottom for AI-related trades. Meanwhile, the U.S. June PCE price index fell 0.1% month-over-month—the first negative monthly reading since 2020—with the core PCE year-over-year rate easing from 3.4% to 3.3%, tempering expectations for near-term interest rate hikes. On the domestic front, the July Politburo meeting boosted confidence by emphasizing the need to "timely plan and introduce pragmatic and effective incremental policies and increase counter-cyclical adjustments." The meeting specifically highlighted "deepening comprehensive reforms in capital market investment and financing to enhance market resilience and confidence," directly addressing core market concerns and effectively stabilizing investor expectations.
Following the sustained correction earlier in the session, the crowdedness of the technology sector has been somewhat absorbed, with positions clearing rapidly. The incremental policy signals released by the July Politburo meeting provide clear directional guidance for the market. Phrases such as "deeply implementing the 'AI+' action" and "solidly advancing the planning and construction of the 'six networks'" have further strengthened the long-term policy certainty for the technology industry. The fundamental support for the technology sector remains unchanged by short-term volatility. While the market may still experience some near-term fluctuations, the growth-oriented technology theme, driven by both policy and industry trends, retains medium-to-long-term allocation value.
Looking ahead, the Politburo meeting has set a positive tone with a clear policy support intent, placing "enhancing capital market resilience and confidence" in a prominent position. Externally, although U.S. Treasury yields remain high, the strong rebound in overseas tech stocks indicates that market confidence in the AI industry trend is being restored. Short-term market volatility may persist, but the rollout of relevant policies and the verification of industry fundamentals provide strong support for the indices. In terms of style, the technology growth sector, after a full adjustment, may gradually regain market favor, likely rotating alongside sectors like consumption and high-dividend stocks. In the medium term, with the gradual implementation of incremental policies and the digestion of external uncertainties, the indices are expected to recover gradually within a range of fluctuations. Data source: Wind, as of July 31, 2026. Fund investments carry risks. Investors should be cautious. Fund managers promise to manage fund assets with honesty, diligence, and responsibility, but do not guarantee fund profitability or returns. Past performance does not predict future results.
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