Major indices in China closed lower today, with most broad-based indexes declining and trading volume shrinking across the two exchanges. The Shanghai Composite Index fell 2.06% to 3,913 points, while the ChiNext Index plunged 3.10%. Hong Kong indices exhibited a volatile trend today. Combined turnover for the Shanghai and Shenzhen markets shrank to approximately 2.8 trillion yuan.
According to WIND data, the majority of the 31 primary Shenwan industries closed in the red. Only banking, coal, and petroleum & petrochemical sectors managed gains, rising 1.71%, 0.65%, and 0.26% respectively. National defense, building materials, machinery, and electronics sectors suffered significant losses. Out of over 5,300 stocks in the entire market, 4,678 declined, indicating poor market breadth and a challenging environment for generating returns.
The U.S. Central Command officially announced the launch of a new round of military strikes against Iran at 5:00 PM Eastern Time on July 12th, with the core objective of weakening Iran's ability to disrupt the free passage of vessels through the Strait of Hormuz. Subsequently, in the early hours of the 13th local time in Iran, explosions were reported in and around key ports including Bandar Abbas and Sirik, signaling a significant escalation of regional tensions. Prior to this, Iran had launched drone and missile attacks against U.S. allies including Kuwait, Jordan, and Qatar, and had at one point declared the closure of the Strait of Hormuz. Although U.S. military and maritime authorities confirmed that vessels could still pass normally via southern routes, global market concerns over the stability of Middle Eastern energy supplies have reignited. The escalating conflict has driven a sharp surge in international crude oil prices and heightened risk-aversion sentiment across the global energy supply chain. Concurrently, U.S. Treasury yields climbed, putting pressure on risk assets broadly. Despite these significant new developments in the Middle East, the overall assessment is that the duration of this new round of U.S.-Iran tensions may remain relatively limited, as both nations face significant constraints from economic and political realities.
Accelerated deleveraging in South Korea has led to a widespread surge in risk-aversion sentiment. According to the latest South Korean media reports on July 12th, the country's five major commercial banks have already utilized over 85% of their annual household loan growth quotas for the first half of the year, with two banks having directly breached the full-year regulatory ceilings. Under the strict aggregate credit control policies of South Korean regulators, the capacity for new lending by major banks in the second half of the year is nearly exhausted. The market widely anticipates an imminent "cliff-like contraction" in domestic credit. Consequently, substantial leveraged funds that previously entered the stock market via bank loans are now facing pressure for forced contraction and passive exit, completely cooling the previously heated leveraged investment trend. Under the impact of this dual negative shock, the South Korean stock market suffered a severe setback, becoming the hardest-hit area in the Asia-Pacific market today. The decline in South Korea's benchmark KOSPI index widened to 9%, triggering the circuit breaker mechanism twice during the session. The exchange urgently activated the SIDECAR mechanism to suspend programmatic selling on KOSPI to stabilize the market. Heavyweight technology stocks plummeted, dragging the KOSPI index below the 7,000-point mark to its lowest level since May 6th. The intense volatility in external markets quickly spilled over to the A-share market, with China's three major stock indices simultaneously experiencing significant corrections, with overall declines exceeding 2%, and the Shenzhen Component Index plunging over 3%. Key thematic sectors collectively weakened, with the memory chip sector hit particularly hard. Sectors including computing hardware, commercial aerospace, satellite navigation, fiberglass, and copper-clad laminates, representing high-end manufacturing and technology themes, underwent comprehensive adjustments, as risk-aversion sentiment spread widely.
The market has recently entered a period of intensive disclosure of corporate earnings forecasts, with many listed companies抢先发布 their semi-annual performance previews. Based on the disclosed information, power equipment, electronics, and basic chemicals are the three sectors with relatively better performance. Benefiting from the AI industry trend, the surge in demand for AI computing power, memory chips, energy storage, and upstream materials has driven significant profit growth for related companies. Furthermore, the resonance between domestic import substitution and computing power demand, along with AI infrastructure substitution, is also driving profit recovery across the entire hardware supply chain, including semiconductor companies. Meanwhile, within non-AI technology sectors such as non-ferrous metals, social services, and securities, some high-quality companies have also achieved significant earnings reversals. Overall, while high-growth sectors remain somewhat scarce, there are still some promising directions beyond the AI industry worth attention.
Returning to the A-share market, the view is that after experiencing high-level volatility and global deleveraging, the valuation resilience and relative attractiveness of the A-share market have become more prominent. Once risk-aversion sentiment begins to repair, the time for market stabilization may not be far off. Overseas, the breakdown of the U.S.-Iran ceasefire agreement and the resurgence of geopolitical conflict suggest that geopolitical risks may continue to fluctuate, but the probability of a significant escalation remains low. The minutes from the June Federal Reserve meeting revealed increased divergence among officials regarding the future policy path, indicating that overseas risk appetite may still face disturbances. However, with the confirmation of the year-on-year decline in the U.S. CPI on July 14th, expectations for Fed rate hikes may ease somewhat. Domestically, recent intensified volatility and high-level adjustments in A-shares have further exposed the fragility of high-level trading structures. Market observations indicate that leveraged funds are continuing to unwind, with the recent substantial reduction in the scale of CSI 300 ETF funds showing signs of improvement, while funds like semiconductor equipment ETFs are experiencing increases in fund scale. After the digestion of阶段性恐慌抛盘 pressure, the time for market stabilization may be approaching. Overall, the downside risk for A-shares may be relatively controllable. High-level volatility is digesting trading factors. Against the backdrop of the ongoing AI industry trend providing upward growth momentum, subsequent opportunities may still be found in structural directions where performance is verifiable and growth trends can be sustainably realized.
Key Investment Considerations
A balanced portfolio allocation is recommended to navigate market volatility. Medium-term focus should remain on technology industry trends, while also validating new growth areas in energy and supply chain security. During the earnings verification period, it is crucial to坚决规避 high-priced, high-valuation thematic stocks lacking earnings support. On the offensive side, technology and growth sectors may still constitute the medium-term主线, but short-term focus should be on directions where order flow, earnings, and industry trends are all being realized, such as computing power, semiconductor equipment, and materials. Against the backdrop where technology sectors are not yet明显泡沫化, high-growth directions still possess some capacity to withstand liquidity disturbances. Innovative pharmaceuticals, benefiting from the continuous realization of global collaboration value and domestic payment and pricing reforms, coupled with relatively full prior adjustments, may serve as a supplementary allocation with independent industrial logic. Concurrently, tightening mineral policies combined with rising demand from AI servers make strategic minor metals such as molybdenum, tantalum, germanium, tungsten, indium, and tin值得关注. As energy price and corporate cost constraints gradually materialize, directions related to energy security such as computing-power grid coordination, energy storage, wind power, green power grids, and lithium batteries are有望成为 new growth branches. On the defensive side, short-term rotation from high to low may continue to flow into high-dividend sectors and cyclical sectors benefiting from海峡通航 and declining risk premiums. Sectors such as non-ferrous metals, chemicals, and coal are建议关注. Furthermore, non-bank financials also represent a direction with strong semi-annual earnings momentum. Supported by factors including high industry景气度, historically low valuations, and largely cleared institutional holdings, this sector may continue to attract sustained and focused attention from funds.
Important Risk Disclosure
The data used in this material is for reference only. The views, analyses, and forecasts cited represent the analysis and judgment of investment research personnel under specific current market conditions and based on certain assumptions. This does not imply suitability for all future market conditions and does not constitute investment advice for readers. Investing involves risks, and caution is required. Before making any investment decision, please carefully read the fund contract, fund prospectus, fund product summary, and other legal documents as well as this risk disclosure statement, to fully understand the fund's risk-return characteristics and product features. Carefully consider all risk factors associated with the fund and, based on your own investment objectives, investment horizon, investment experience, and asset status, fully assess your own risk tolerance. On the basis of understanding the product and sales suitability opinions, make rational judgments and prudent investment decisions.
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