The market experienced a volatile adjustment on July 13th, with the three major indices collectively falling sharply. At the close, the Shanghai Composite Index was down 2.06%, the Shenzhen Component Index fell 3.48%, and the ChiNext Index dropped 3.1%.
Looking at sectors, the pharmaceutical sector bucked the trend to move higher, the banking sector fluctuated and gained, and the electronic specialty gas concept performed actively. On the downside, the optical fiber concept was hit hard, the memory chip concept saw a collective sharp decline, and the MLCC concept fluctuated and fell.
Across the entire market, over 4,600 stocks declined, with more than a hundred hitting the daily downside limit. The combined turnover for the Shanghai and Shenzhen markets was 2.82 trillion yuan, a decrease of 570.8 billion yuan from the previous trading session.
Key Market Movements
This afternoon, a remarkable scene unfolded in the A-share market. The Shanghai Composite Index, which had already broken through several support levels (such as the annual moving average) in the morning, touched a new intraday low of 3902.61 points at 13:29. Following this, it, along with other major indices, initiated a brief counterattack.
What's interesting is that the 3902.61 point level precisely matches the intraday high reached by the Shanghai Composite Index on April 7th of this year. The next trading day, April 8th, saw a gap-up opening, leaving a gap between 3902.61 and 3926.25 points.
This means that today, the Shanghai Composite Index perfectly "filled" this gap to the exact point, after which market funds seemed to reach a consensus, triggering a brief pulse-like rebound.
Unfortunately, this short-lived rebound did not reverse the prevailing panic. The number of stocks hitting the daily limit-down continued to increase in the afternoon. At 14:34, the Shanghai Composite Index set a new intraday low of 3900.67 points before rebounding once more.
Implications for Market Participants
So, what insights does this offer to all market participants?
Firstly, regarding the indices, the first step towards stabilization is for them to "stop setting new lows" in the coming days.
If individual stock sentiment does not recover in tandem, then heavyweight stocks (which have a greater impact on the indices) need to stabilize first. Recently, the Shanghai Composite Index has often required support from sectors like banking and high-dividend stocks, while the ChiNext Index (and the STAR Market) remains influenced by the performance of overseas technology stocks.
For instance today, the South Korean stock market experienced multiple downward circuit breakers, dampening the sentiment for a recovery in tech stocks. Represented by Gigadevice Semiconductor Inc. (SHSE: 603986), which had a turnover of 37.737 billion yuan, ranking second among all A-shares, the situation for high-flying tech stocks remains challenging.
Looking at the intraday chart, Gigadevice Semiconductor Inc. (SHSE: 603986) hit the daily limit-down price five times today at 13:19, 13:22, 14:10, 14:21, and 14:52, ultimately closing at the limit-down price.
Secondly, despite the intraday rebound triggered by the precise gap-filling in the Shanghai Composite, looking at the daily charts, the main indices have moved lower again following last Friday's sharp decline and currently maintain a rather unfavorable technical pattern.
Market Outlook and Analysis
This suggests that after the emergence of the second "freeze" point (with last Friday afternoon being the first), the probability of a short-term market recovery is increasing. However, the likelihood of a "one-step" complete recovery is diminishing, with the market now more inclined towards a "time-for-space" consolidation pattern.
Naturally, there is still anticipation for a "major miracle day" to occur, as a strong bullish candlestick is the fastest and most effective way to boost market sentiment.
Finally, a word of caution: In a market where "everything is falling," there's no need to overly dwell on what one might have done wrong. As long as one remains in the market, encountering some extreme conditions is unavoidable.
Brokerage Perspectives
A research report from China Merchants Securities Co.,Ltd. (SHSE: 600999) suggests that from a timing perspective, the market has not yet fully "turned from danger to safety." Although trading volume and sentiment showed some recovery last Friday, valuation distributions are still contracting. Furthermore, significant IPO events this week may further increase market volatility. Therefore, it is still recommended to maintain a low-to-medium position and adopt a wait-and-see approach in the short term.
Specifically, on one hand, the fundamental market conditions have not shown significant improvement. The latest inflation data shows a CPI year-on-year growth rate of 1.0%, lower than the market consensus median of 1.18%. Moreover, the CPI-PPI gap continues to widen, indicating that domestic demand remains relatively weak and structural prosperity has not yet eased.
On the other hand, market sentiment and price-volume volatility have increased noticeably. The PB dispersion, a core indicator monitored by the institution, remains weak, suggesting that the overall market valuation is in a state of contraction from the top.
Additionally, a significant IPO event is scheduled for July 16th. Looking at the recent listing of a major tech stock (Moore Threads on Dec 5, 2025), although the low free-float model has a limited siphoning effect on market liquidity and is expected to boost the tech sector's valuation center in the long run, it may still cause short-term market volatility (the STAR 50 Index moved -1.24%/-0.89%/+1.36% in the three days before Moore's listing). Hence, from a timing perspective, maintaining a wait-and-see stance is advised until the situation becomes clearer before making decisions.
The strategy team at Shenwan Hongyuan, however, indicates that the current adjustment phase is entering its final stage. The non-tech sectors adjusted first from May to June, followed by the tech sector from June to July. The adjustment structure is becoming more complete, with the contraction in赚钱效应 and momentum效应 being充分. The conditions for the adjustment phase to conclude are in place.
But a new round of上涨 will need to be approached gradually. The computing power inflation wave that began in mid-November 2025 has seen its行情演绎的宽度和深度趋于充分. In the short term, it is highly likely that the惯性 in capital supply and demand will be broken, which could serve as a节点 for segmenting the波段行情 within the tech sector. The pace of the tech sector rally is slowing, entering a stage of waiting for new significant industry catalysts. When the行情 restarts, it will most likely mark a new行情阶段, rather than a simple continuation of the previous phase's线索.
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