Major A-share indices rebounded today, with the Shenzhen Component Index and the ChiNext Index both rising over 1%. Trading volume across the two markets continued to shrink from the previous session, totaling 3.3 trillion yuan. Among the primary Shenwan industries, the electronics sector led with a gain of 4.15%.
Key Observations
The fiscal revenue and expenditure data for the first five months of this year continue to show a significant divergence. Revenue has been improving month by month, with general public budget revenue in May growing 6.6% year-on-year, maintaining a relatively high growth rate above 6% for three consecutive months. In contrast, expenditure growth has slowed markedly, turning negative in April and May, lagging behind seasonal patterns. Structurally, non-tax revenue saw a notable rebound in May, while the gap between central and local government revenue widened, and performance varied across different tax categories. On the expenditure side, spending on science and technology continued to grow at a high year-on-year rate, while infrastructure-related expenditure declined significantly, and spending on people's livelihoods maintained rapid growth. Faced with the pressures of limited revenue growth and rigid increases in expenditure, fiscal policy is shifting towards "targeted support." Amid the growing pains of transitioning away from land-based finance, traditional construction sectors are contracting passively, with limited funds being concentrated on "people-centric" areas. Looking ahead, as the issuance of ultra-long-term special treasury bonds is largely completed by the end of June, and the deployment of new special-purpose bonds accelerates, incremental fiscal funds are expected to further tilt towards local governments. The actual effectiveness will ultimately depend on the smoothness of two transmission channels: first, whether central fiscal funds can be effectively transmitted to local levels and translate into physical work; second, whether fiscal expenditure can genuinely convert into final demand.
Market News Summary
Nine government departments jointly issued the "Notice on Several Measures to Cultivate and Expand the Automotive Aftermarket Consumption," proposing 17 initiatives across six areas: automotive modification, RV camping, classic cars, maintenance and insurance, motorsports, and car rentals. On the same day, a list of 40 pilot cities for automotive circulation consumption reform was announced. Vice Minister of Commerce Sheng Qiuping stated that China's car ownership has reached 370 million vehicles, with passenger vehicles over seven years old now accounting for more than 50%, indicating the automotive aftermarket is entering a period of rapid growth.
Brief Analysis: The policy directly addresses pain points such as imperfect management systems and inadequate standard frameworks in the automotive aftermarket. The 17 measures are comprehensive and substantial, marking a transition for the aftermarket from "unregulated growth" to a new stage of "standardized development." As a trillion-yuan "new blue ocean," policy catalysts are expected to boost medium-to-long-term demand expectations for segments like maintenance chains, RV manufacturing, and event operations, potentially forming effective linkages with the recent new energy vehicle industry chain.
On June 23, the Drug Centralized Procurement Office released the "Announcement for the 12th Batch of National Centralized Drug Procurement (No. 1)," officially launching a new round of centralized procurement covering 65 drug varieties. The rules continue the principles of "stabilizing clinical use, ensuring quality, preventing cut-throat competition, and guarding against bid-rigging." For the first time, clear rules were established for handling varieties with patent disputes—companies unable to provide a non-infringement commitment will be removed from the procurement network. A "reference point" standard deviation mechanism was also introduced to prevent abnormally low bids.
Brief Analysis: The optimized rules for the 12th batch reflect a policy upgrade direction focused on "improving quality and efficiency." The "reference point" standard deviation mechanism provides a more scientific constraint on abnormally low prices, while the clear handling rules for patent-disputed varieties enforce intellectual property protection within the centralized procurement framework. For the pharmaceutical sector, the normalization of centralized procurement continues to compress profit margins for generic drug manufacturers. However, rule optimization helps shift industry competition from "price wars" towards quality and compliance, giving companies with faster innovation transformation a clearer medium-to-long-term advantage.
On June 23, S&P Global released the preliminary U.S. Manufacturing PMI for June, which rose to 55.7, exceeding the expected 54.6 and reaching a new 49-month high since May 2022. The preliminary Services PMI rose to 51.3, and the preliminary Composite PMI rose to 52.2, a five-month high. The growth rate for new manufacturing orders was the fastest in over four years, partly driven by companies stockpiling inventory early due to concerns about supply disruptions. Price pressures remain elevated, with input cost inflation staying high, and supply chain delays were the most severe since August 2022.
Brief Analysis: The U.S. manufacturing PMI's expansion beyond expectations indicates continued economic resilience, but structural concerns underlie the data—the "front-loading effect" of companies stockpiling inventory, which boosted orders, does not represent a substantial improvement in final demand. For global markets, the strong data further reduces the urgency for the Federal Reserve to cut interest rates. Rising U.S. Treasury yields and a stronger U.S. dollar may pressure risk assets in emerging markets. For A-shares, expectations of tighter external liquidity could weigh on the valuations of high-growth sectors with elevated valuations.
Market Performance Review
On June 24, the three major A-share indices closed higher. The Shanghai Composite Index closed at 4110.81 points, up 0.11%. The Shenzhen Component Index closed at 16051.32 points, up 1.24%. The ChiNext Index closed at 4251.42 points, up 1.41%. The STAR 100 Index closed at 2210.69 points, up 3.58%. Among the primary Shenwan industries, Electronics, Building Materials, and Conglomerates led the gains, rising 4.15%, 4.10%, and 3.19% respectively. Agriculture, Forestry, Animal Husbandry & Fishery, Beauty & Personal Care, and Banking declined the most, falling 2.90%, 2.78%, and 2.48% respectively. 1,434 stocks advanced, while 4,034 declined.
Capital Flows
Total market turnover was 3307.181 billion yuan, down from the previous trading session. The balance of margin trading and securities lending closed at 3000.971 billion yuan yesterday, up from the previous day.
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