On July 22nd, the three major A-share indices experienced mixed and choppy trading in the morning session. By the midday close, the Shanghai Composite Index had risen by 0.50%, the Shenzhen Component Index increased by 0.61%, while the ChiNext Index declined by 0.13%.
Across the broader market, the number of declining stocks outnumbered gainers, with over 3,400 stocks in the red. The combined turnover for the Shanghai, Beijing, and Shenzhen markets during the half-day session reached 1.78 trillion yuan, a decrease of 221.3 billion yuan from the previous day. Mainland institutional funds recorded a net inflow of 14.93 billion yuan. The market's median stock performance stood at -0.66%.
Key Sectors in Focus
The semiconductor equipment sector continued its strong performance from the previous session. Tolance surged with a second consecutive 20cm limit-up, while Zhenbao Technology, Naura Technology Group, Jinhaitong, Huaya Intelligent, and Yitang Co., Ltd. also posted significant gains.
The precious metals concept remained robust, with Xingye Yinyin achieving a second consecutive limit-up. Chifeng Gold, Xiaocheng Technology, Shanjin International, Zhaojin Mining, and Sichuan Gold followed suit with gains.
The computing power leasing concept saw active and repeated interest. Litong Electronics and Zhengtong Electronics both hit their second straight limit-up, Qunxing Toys opened and locked at the limit-up, Tongniu Information jumped over 10%, and Hongjing Technology, Meili Cloud, Capital Online, and Yangdian Technology also advanced.
The innovative drug concept performed actively, with Lamei Pharmaceutical soaring over 10%. Dizal Pharmaceutical, Medicilon, XinGanJiang, and InnoStar also rose.
Areas of Weakness
On the downside, the AI application concept retreated across the board, with Gan Consulting falling by the daily limit.
The humanoid robotics concept trended lower, with Jinghua New Materials hitting the limit-down.
Internet finance and brokerage concepts collectively declined.
The lithium battery concept underwent a correction, with Penghui Energy dropping nearly 10%.
The major consumption concept remained persistently weak.
The military-industrial chain, banking, and real estate sectors also showed weakness.
Catalysts and Market Drivers
Several positive catalysts emerged for the hard technology sector:
1. Overnight and into the morning, U.S. semiconductor, memory, and optical communication stocks surged collectively. The Philadelphia Semiconductor Index skyrocketed over 5%, marking its best single-day performance in six weeks. In the Asia-Pacific region today, South Korea's KOSPI index surged intraday, triggering a trading halt again.
2. Foreign institutions turned bullish on the memory sector. Morgan Stanley semiconductor analyst Joseph Moore noted in a recent report that the shortage of data center memory chips is worsening and is expected to persist until 2028, with memory chip prices forecast to rise at least 25% from Q2 to Q3. This assessment directly ignited bullish sentiment in the memory chip segment.
3. Yuanjie Technology pre-announced a 12-fold increase in its interim profit, indicating a quantum leap in the company's profitability scale within a year.
4. The A-share market welcomed a batch of positive corporate actions, with numerous listed companies intensively announcing share buyback plans and shareholding increase plans by major shareholders and executives. The most notable announcement came from Sungrow Power Supply. The company received a proposal from Chairman Cao Renxian to use 5 to 10 billion yuan of its own or raised funds to repurchase shares for equity incentive or employee stock ownership plans.
5. Today marks the seventh anniversary of the launch of the Sci-Tech Innovation Board (STAR Market). Over seven years, it has grown into a vital sector with over 600 listed companies and a total market capitalization exceeding 13 trillion yuan. Its inclusive multi-tiered listing standards have continuously strengthened, enabling various technology enterprises to grow rapidly with the support of capital.
Market Outlook and Institutional Views
Looking ahead, Meng Lei, China Equity Strategist at UBS Securities, stated that after the release of trading congestion in the technology sector, technology and AI will remain the main market themes in the second half of the year. Benefiting from the rapid global development of artificial intelligence and strong domestic policy support, the technology sector is expected to maintain robust earnings growth.
Analysis of Key Sectors
1. Semiconductor Equipment Sector Maintains Strength
The semiconductor equipment sector continued its strong run from the previous day. Tolance achieved a second consecutive 20cm limit-up, with Zhenbao Technology, Naura Technology Group, Jinhaitong, Huaya Intelligent, and Yitang Co., Ltd. also posting significant gains.
Commentary: According to a report released by SEMI on July 21st, global semiconductor equipment sales are projected to grow 23.2% to $165.9 billion in 2026, reaching a record high of $229.5 billion by 2028.
2. Precious Metals Concept Remains Firm
The precious metals concept stayed strong, with Xingye Yinyin securing a second limit-up. Chifeng Gold, Xiaocheng Technology, Shanjin International, Zhaojin Mining, and Sichuan Gold followed higher.
Commentary: Spot gold broke above $4,120 per ounce, rising 1.05% intraday. Spot silver surpassed $59 per ounce, gaining 0.43%.
3. Computing Power Leasing Concept Sees Repeated Activity
The computing power leasing concept was active again. Litong Electronics and Zhengtong Electronics hit their second consecutive limit-up, Qunxing Toys opened and locked at the limit-up, Tongniu Information surged over 10%, and Hongjing Technology, Meili Cloud, Capital Online, and Yangdian Technology also advanced.
Commentary: At a sub-forum of the World Artificial Intelligence Conference on July 21st, a senior executive from Tencent Cloud stated that to minimize inference costs, the company will deploy domestic computing power on a large scale. The company expects to deploy NPO (Near-Packaged Optics) super nodes in Q4 2026 and called for unified NPO industry standards globally.
4. Innovative Drug Concept Shows Lively Performance
The innovative drug concept was active, with Lamei Pharmaceutical soaring over 10%. Dizal Pharmaceutical, Medicilon, XinGanJiang, and InnoStar also rose.
Commentary: Reports indicate that a novel innovative drug targeting a new mechanism, developed and submitted for approval globally simultaneously, was approved for market launch in China that day. This marks a historic breakthrough as an original-target innovative drug from global multi-center R&D achieving first approval and launch in China.
Institutional Perspectives
Liu Xiaoning of Huayuan Securities: The current market may present a prime window for rational positioning, highlighting long-term value investment opportunities.
Liu Xiaoning, General Manager Assistant and Head of Research Institute at Huayuan Securities, noted that with the recent dense release of listed companies' interim performance forecasts, the substantial earnings surge of firms across the AI computing power industry chain has substantively verified the sector's high prosperity. External disturbances are merely temporary factors and cannot alter the medium-to-long-term structural uptrend of A-shares. The current market may offer a prime window for rational positioning, highlighting long-term value investment opportunities.
Meng Lei of UBS Securities: After the release of trading congestion, the technology sector and AI remain the main market themes for the second half.
Meng Lei, China Equity Strategist at UBS Securities, stated that after the release of trading congestion in the technology sector, technology and AI will remain the main market themes in the second half of the year. Benefiting from the rapid global development of artificial intelligence and strong domestic policy support, the technology sector is expected to maintain robust earnings growth. Various funds, including sector ETFs, thematic ETFs, actively managed tech-focused public funds, margin financing, and private equity, are expected to continue their marginal net inflows into the technology sector. The potential for further "crowding" into the technology sector remains in terms of both duration and intensity.
Huatai Securities: Competition in Domestic AI Models Heats Up, Gap with Overseas Models Narrows.
A Huatai Securities research report pointed out that the iterations of the Kimi model in July and the new GLM model in Q2 reaffirm the core logic of domestic models, with the iteration cycle potentially shortening further. Compared to overseas closed-source models, the current technological gap for domestic models has narrowed to 3-4 months. Building on the advantage of high cost-effectiveness, domestic models are continuously raising their capability ceiling and pricing power. According to their evaluation, the K3 model's performance is only slightly weaker than GPT-5.6 Sol, and the GLM 5.2 model released is comparable to Opus 4.7. From an investment perspective, the rapid improvement in domestic model capabilities is expected to solidify the positive trend for the industry chain. In the short term, despite improved pricing power, competition at the model level has intensified significantly. In the long term, the continuous improvement in Agent penetration is expected to further expand the potential market space.
China Galaxy Securities: Surging Computing Power Demand Drives Structural Upgrade and Value Reconfiguration in Optical Modules.
A China Galaxy Securities research report posits that the optical communication industry is undergoing profound structural changes driven by the explosive demand for AI computing power. Industry sentiment has shifted from traditional cyclical fluctuations to a long-term expansion channel supported by technological iteration and capital expenditure resonance. Major global cloud providers and AI companies continue to increase their budgets for computing power infrastructure investment, directly driving non-linear growth in demand for high-speed optical modules. The report believes that starting from 2026, the penetration rate of high-speed products in the data communication field is accelerating, with 1.6T products entering the mass delivery cycle. The high growth on the demand side provides relatively solid fundamental support for capacity release and profit realization across all segments of the industry chain. As the certainty of high demand growth continues to increase, capacity release has also improved quarter by quarter since the beginning of the year. Although tight supply of upstream raw materials persists, the degree of tightness is expected to continue narrowing with the deepening of processes such as import substitution.
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