On June 26th, Chinese assets experienced a broad sell-off. In the A-share market, by the midday close, the Shanghai Composite Index had fallen 2.14%, the Shenzhen Component Index dropped 3.04%, and the ChiNext Index plunged 3.72%. Additionally, the STAR 50 Index declined by 2.60%. The market was overwhelmingly negative, with over 4,500 stocks trading lower. In the Hong Kong market, the Hang Seng Index fell 2.24%, and the Hang Seng Tech Index tumbled 3.83%, with technology and internet stocks leading the losses. The FTSE China A50 Index futures saw their losses widen to 3%.
External market disturbances are likely the primary cause of today's sharp decline, primarily reflected in three aspects. Firstly, on the first trading day after its earnings report this Thursday, Micron Technology (MU) saw its market capitalization surge by over $260 billion, while Apple (AAPL) lost over $180 billion in market value, with its stock price falling more than 6%. This directly caused the Nasdaq 100 Index to experience a "flash crash" after initially surging 2% at the open. Secondly, the broader Asia-Pacific markets collectively sold off. After opening, Japan's Nikkei 225 Index fell nearly 5%, while South Korea's KOSPI Index also plunged over 8%, triggering a circuit breaker, with stocks like SK Hynix and Samsung Electronics diving sharply. Analysts point out that the overnight decline in large-cap US tech stocks has heightened investor concerns about the prospects of the "AI trade." Furthermore, developments in the Strait of Hormuz have added uncertainty. According to US media reports, Iran has proposed imposing tolls on ships passing through the Strait of Hormuz, to which US Secretary of State Rubio responded, stating the move would "set an unacceptable precedent."
Market Overview
Returning to the market performance, computing hardware concepts were hit hard across the board, with stocks like Zhongying Technology and Taichenguang falling over 10%, and stocks collectively referred to as "Yi Zhong Tian" experiencing significant declines. Energy metals saw substantial drops, with Yongshan Lithium hitting the daily down limit, and stocks within the sector like Rongjie Co., Ltd. and Shengxin Lithium Energy also tumbling. Large financial concepts including securities IT, brokerages, insurance, and internet finance collectively pulled back, while the semiconductor industry chain declined across the board, with Lihexing falling over 10%. On the gainers' side, the glass substrate concept led the market, with Leeman Optoelectronic and Wufang Optoelectronic hitting the daily up limit. The pork concept saw a sudden surge, with Shennong Group hitting the daily up limit, followed by gains in Muyuan Foods, Wens Foodstuff Group, Dayu Bio, and Lihua Co., Ltd.
Market Outlook
Looking ahead, Caixin Securities believes that, overall, supported by heavyweight stocks on the STAR Market, the major indices are showing a rebound trend with both volume and price rising, retaining short-term upward momentum. However, structurally, the market has not yet escaped an extremely polarized pattern. Recent trends show that while the style rotation is primarily between "cyclical" and "technology" sectors, the technology direction, particularly the STAR Market, exhibits a better trend and holds a more dominant position. The cyclical direction, on the other hand, experiences relatively violent fluctuations with greater negative feedback effects. Therefore, in the short term, A-shares may maintain a volatile rebound trend, and the situation of structural divergence among sectors is likely to persist.
Key Sector Movements
1. Computing Hardware Concepts Plunge
Computing hardware concepts were hit hard across the board, with stocks like Zhongying Technology and Taichenguang falling over 10%, and stocks collectively referred to as "Yi Zhong Tian" experiencing significant declines. Analysis: The broader Asia-Pacific markets collectively sold off. After opening, Japan's Nikkei 225 Index fell nearly 5%, while South Korea's KOSPI Index also plunged over 8%, triggering a circuit breaker. Analysts point out that the overnight decline in large-cap US tech stocks has heightened investor concerns about the prospects of the "AI trade."
2. Energy Metals See Sharp Declines
Energy metals saw substantial drops, with Yongshan Lithium hitting the daily down limit, and stocks within the sector like Rongjie Co., Ltd. and Shengxin Lithium Energy also tumbling. Analysis: On the news front, lithium carbonate futures fell over 5% on June 26th.
3. Pork Concept Experiences Sudden Surge
The pork concept saw a sudden surge, with Shennong Group hitting the daily up limit, followed by gains in Muyuan Foods, Wens Foodstuff Group, Dayu Bio, and Lihua Co., Ltd. Analysis: Sources from several companies indicate that new targets for reducing hog production capacity have been set recently, with some companies noting that the timeline for culling has been moved forward. A representative from a listed company stated, "The company participated in the recent capacity regulation meeting and will implement a certain amount of capacity reduction, and this time it must be completed before September, accelerating the schedule."
Institutional Perspectives
Caixin Securities: Indices Show Rebound with Rising Volume and Price, Short-term Upward Momentum Remains
Caixin Securities believes that, overall, supported by heavyweight stocks on the STAR Market, the major indices are showing a rebound trend with both volume and price rising, retaining short-term upward momentum. However, structurally, the market has not yet escaped an extremely polarized pattern. Recent trends show that while the style rotation is primarily between "cyclical" and "technology" sectors, the technology direction, particularly the STAR Market, exhibits a better trend and holds a more dominant position. The cyclical direction, on the other hand, experiences relatively violent fluctuations with greater negative feedback effects. Therefore, in the short term, A-shares may maintain a volatile rebound trend, and the situation of structural divergence among sectors is likely to persist. With Micron Technology's earnings exceeding expectations, market expectations for subsequent tech giant earnings may become more optimistic.
CITIC Securities: Firmly Optimistic About Subsequent Performance of Electronics Sector
CITIC Securities stated that it expects overall performance in the electronics industry to be positive in Q2 2026. Looking ahead to the second half of 2026, the upward inflection point for domestic semiconductor equipment and domestic computing power is clear, while power-related components, PCBs, and memory driven by the global AI trend also continue to show strong performance, with all five directions remaining favorable. Simultaneously, the AI industry chain rally is beginning to diverge, with supply chain orders and trends in areas like consumer electronics optics and glass substrates becoming clearer, reinforcing a positive outlook for the sector's subsequent performance.
Sinolink Securities: Micron Technology Advances Long-term Agreements, Supply-Demand Gap Expected to Persist
A Sinolink Securities research report suggests that Micron Technology's advancement of long-term agreements is expected to sustain the supply-demand gap. Micron Technology has completed 16 Strategic Customer Agreements (SCAs) with clients, covering downstream markets including data centers, consumer electronics, and automotive. The SCAs with automotive clients are for three years, while others are generally for five years. These 16 SCAs already account for 20% of Micron Technology's DRAM shipments and one-third of its NAND shipments. The lower end of the price range in Micron Technology's SCAs can still deliver profitability exceeding past cycle peaks. Micron Technology forecasts that DRAM and NAND supply will remain tight through 2027. Sinolink Securities believes the supply in the memory industry is likely to stay tight, allowing Micron Technology to maintain high profitability. The company's push for long-term agreements with downstream clients may reduce the cyclical volatility of its product selling prices and mitigate the cyclicality of its performance.
Tianfu Securities: Current Market Style Likely to Persist Until Micro-cap Index and Dividend Sectors Stabilize
Tianfu Securities observes that the current market is broadly in a state of decline, with over 4,200 stocks falling yesterday. Looking at the intraday charts of major indices, the white lines (representing large-cap stocks) are all above the yellow lines, indicating that large caps are leading the market, with the technology main theme and non-bank financials moving in sync. Under the combined effect of the main theme and large-cap stock attraction, several noteworthy trends include the continued breakdown and primary decline of dividend and low-volatility dividend ETFs, and the micro-cap stock index, reflecting the average investor's returns, hitting a new low for the period. Investors not focused on the main theme or not participating in the non-bank financial sector have had a relatively poor experience recently. Overall, the market remains event-driven. Micron Technology's earnings report far exceeding market expectations ignited sentiment for technology growth stocks, with the Asia-Pacific markets responding enthusiastically. Within A-shares, technology stocks also showed divergence, with stocks having stronger earnings support expectations performing better overall. The earnings verification window is gradually guiding fund flows. This week, the market has presented an alternating pattern of non-bank financials supporting the market and the technology main theme rotating, with both directions exerting a strong attraction on existing funds. The current style is likely to persist until the micro-cap index and dividend sectors stabilize.
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