Mainland China's equity market displayed a choppy yet resilient session on Monday, with major benchmarks paring losses to briefly turn positive in the afternoon before a mixed close. The Shanghai Composite Index inched up 0.19%, while the Shenzhen Component Index slipped 0.35% and the ChiNext Index fell 1.00%.
Sector performance was notably divergent. Innovative drug developers and the CRO concept saw a rebound, agriculture-related shares remained robust throughout the day, liquid-cooled server concepts bounced strongly, and consumer-facing sectors such as retail and tourism gained traction. On the downside, resource-linked stocks including precious metals and lithium miners pulled back sharply.
Breadth was positive with more than 4,200 stocks advancing. However, the combined turnover on the Shanghai and Shenzhen bourses came in at 1.83 trillion yuan, down 175.6 billion yuan from the previous session. At 1.8443 trillion yuan, this marks the lowest daily turnover in the second half of the year, following Friday's already subdued 1.8922 trillion yuan.
Such "low-volume" conditions typically make it difficult for the market to stage a decisive breakout. For one, the technology shares that are most capable of driving index gains are also the most dependent on ample liquidity. During the rebound in early August, market-wide turnover hovered near 2.5 trillion yuan, significantly higher than current levels. The missing hundreds of billions of yuan are precisely what the leading tech names and core tech stocks need most. Wind data shows that the number of stocks with daily turnover exceeding 10 billion yuan has declined noticeably since August, with fewer than 10 such stocks for three consecutive sessions since Friday.
Secondly, without incremental capital participation, onshore funds are left shuffling positions among existing sectors, leaving the market lacking a unified upward force. While most investors do not object to a "two steps forward, one step back" pattern because the trend remains upward, a rebound under shrinking volume can sometimes devolve into "one step forward, one step back" consolidation, or worse, "one step forward, two steps back" declines.
So, standing at today's juncture of "low volume plus broad-based gains plus weak indices," what positive signals deserve attention?
The first is that technology stocks showed early signs of stabilizing during intraday trading. At 9:47 a.m., both the ChiNext and STAR 50 indices rebounded after hitting intraday lows and did not revisit new lows in subsequent trading. In the afternoon, the three major indices briefly turned positive, with key contributors being heavyweight names such as Cambricon, SMIC, and Foxconn Industrial Internet. Notably, overall market turnover during this period was slightly higher than in the morning.
For the ChiNext Index, the annual moving average has served as a support level since May last year. During the late-July/early-August pullback, it briefly broke below this level before recovering. This time, both the annual moving average and the previous low remain two key "defense lines" to watch. For the STAR 50 Index, the sequence is reversed—the focus should be on whether the previous low and the annual moving average can trigger a volume-backed recovery.
The second positive signal is that the "style rebalancing" in the market has made clear progress through July and the first half of August. In plain terms, the "oversold rebound" of non-tech and tech stocks has now been completed in sequence, with both groups nearly or already standing on equal footing. At this stage, "overvalued versus undervalued" is no longer the primary criterion for capital rotation; instead, more weight is being given to fundamentals, sentiment, and liquidity capacity. Take today as an example: aside from precious metals and lithium miners leading the decline, the banking sector—traditionally a proxy for the "defensive end"—also drifted lower. As a result, other market directions, such as the leading agricultural and pharmaceutical sectors, can be classified as belonging to the "offensive end." This is exactly the opposite of Monday's trading pattern.
From this perspective, current market sentiment across participants leans more toward "watchful waiting than panic"—or put differently, sentiment appears to be stabilizing ahead of the indices. In the short term, until a genuine "volume-backed repair" emerges, it remains appropriate to view the market as undergoing a bottoming and consolidation phase, with opportunities to be found through sector rotation.
Coincidentally, in the early hours of Thursday Beijing time (after the U.S. market close on Tuesday local time), NVIDIA is set to report its fiscal 2027 second-quarter earnings—an event that could again serve as a catalyst for global tech stock repricing. The company has previously guided for revenue of approximately $91 billion, plus or minus 2%, with non-GAAP gross margin guidance of 75%. Wall Street currently holds elevated expectations for this quarter.
Citigroup projects NVIDIA's second-quarter revenue at $93 billion, above the then-consensus of around $92 billion, and forecasts third-quarter revenue of $105.1 billion, also exceeding the market's expectation of $103.7 billion. Citigroup has also raised its fiscal 2027 AI GPU sales forecast by 3% to $290 billion, representing 82% year-on-year growth.
UBS offers an even more bullish view, estimating this quarter's revenue could reach $94 billion to $95 billion, with third-quarter guidance of $107 billion to $108 billion and actual third-quarter revenue potentially exceeding $110 billion.
One aggressive overseas analyst argues that investors are treating NVIDIA's stock as if the company has "lost" in the AI race—a view he deems entirely misguided. In a client note on Monday, he wrote: "It is time to close your eyes and load up on NVIDIA shares."
Comments