The three major A-share indices closed with mixed results on July 1st, with the ChiNext and STAR 50 indices experiencing volatile adjustments.
A clear divergence was observed between the yellow and white lines, indicating weaker performance among major weighted stocks.
At the close, the Shanghai Composite Index gained 0.44%, while the Shenzhen Component Index fell 0.53% and the ChiNext Index dropped 1.89%.
Total trading volume for the Shanghai and Shenzhen markets reached 3.66 trillion yuan, an increase of 386.2 billion yuan from the previous session.
In terms of market sectors, a significant shift in style has emerged with the start of July, as institutional rebalancing strategies begin to take effect.
While "new economy" sectors maintained strength, "old economy" stocks experienced a broad-based surge.
The large financial sector led the gains, with stocks like Tianfeng Securities Co.,Ltd. and Hui Jin Technology Co.,Ltd. hitting their daily limit-up.
The pork concept continued its upward trajectory, with Aonong Biological Technology Co.,Ltd., Kingsino Technology Co.,Ltd., New Hope Liuhe Co.,Ltd., and Tianbang Food Co.,Ltd. all reaching limit-up, while Dayu Bio-Tech Co.,Ltd. soared over 26%.
Consumer sectors including dairy, retail, and baijiu liquor also saw broad gains, with New Hope Liuhe Co.,Ltd. and Anhui Golden Seed Winery Co.,Ltd. among those hitting limit-up.
On the downside, the computing power chip concept adjusted, with VeriSilicon Microelectronics (Shanghai) Co., Ltd. and Cambricon Technologies Corporation Limited declining.
The PCB industry chain saw a full retreat, while MPO, optical chip, optical module, and optical fiber cable concepts moved lower.
The inverter concept also weakened, with Sungrow Power Supply Co., Ltd. experiencing a significant drop.
The recent frequent activity in the securities sector, often seen as a "bull market bellwether," has drawn attention.
Institutional analysis suggests that the persistently high trading activity in the A-share market provides solid support for improving fundamentals in the sector.
With current valuations in the sector at historically low levels, it presents a relatively high investment value.
One view posits that while recent market trends have been intensely focused on the technology sector, such extreme structural performance may lead to a market adjustment.
The non-bank financial sector, with its improving fundamentals and low valuations, offers attractive value; a potential market rotation or structural adjustment could present an optimal entry point.
Looking ahead, as the market enters July, the first half's extreme divergence driven by AI industry trends and speculative capital flows is encountering new variables with the approach of the mid-year reporting season.
Another perspective highlights that with the market undergoing a strong recovery, sustained high turnover, and continued supportive policies, confidence in a market floor and numerous structural opportunities is strengthening.
As the window for half-year performance forecasts opens in July, the core logic driving market hotspots is shifting from valuation expansion to the verification of actual earnings quality.
Sector Highlights
Securities Sector Sees Active Surge
The large financial concept led the market higher, with Tianfeng Securities Co.,Ltd. and Hui Jin Technology Co.,Ltd. among multiple stocks hitting their daily limit.
Analysis: Catalysts include securities firms now holding significant equity in hard-tech companies through investment banking follow-on investments and direct equity investments, coupled with the sector's historically low valuations, leading to increased capital recognition of its technology-oriented attributes.
Pork Concept Continues Upward Momentum
The pork concept sustained its rise, with Aonong Biological Technology Co.,Ltd., Kingsino Technology Co.,Ltd., New Hope Liuhe Co.,Ltd., and Tianbang Food Co.,Ltd. reaching limit-up, and Dayu Bio-Tech Co.,Ltd. surging over 26%.
Analysis: Institutional research reports indicate clear policy signals to stabilize the market, with the Ministry of Agriculture revising down the reasonable inventory of productive sows to 37.5 million, and the National Development and Reform Commission urging breeding enterprises to reduce capacity, thereby regulating supply at the source.
According to industry cycle patterns, capacity contraction is expected to gradually translate into reduced market supply in the second half of the year, potentially improving the supply-demand balance.
Broad-Based Gains in Consumer Sectors
Consumer concepts including dairy, retail, and baijiu liquor saw widespread gains, with New Hope Liuhe Co.,Ltd. and Anhui Golden Seed Winery Co.,Ltd. among those hitting limit-up.
Interpretation: Research suggests that from a dividend perspective, leading liquor companies have stable cash flows and offer attractive dividend yields, possessing characteristics of income-generating assets.
The sector currently holds medium to long-term investment value, with attention recommended on leading firms with strong operational certainty.
Computing Power Chip Concept Undergoes Adjustment
The computing power chip concept experienced volatile adjustment, with VeriSilicon Microelectronics (Shanghai) Co., Ltd. and Cambricon Technologies Corporation Limited declining.
Analysis: A catalyst was an announcement from Cambricon Technologies Corporation Limited on the evening of June 30th, noting its stock price had risen significantly recently and warning of potential short-term downside risks following rapid gains.
The company stated its daily operations were normal with no other undisclosed material information.
Institutional Perspectives
Dongxing Securities: Maintains Firm Confidence in AI-Led Tech as Core Market Theme
Dongxing Securities maintains that the A-share market's structural trends will continue. For the second half of 2026, it remains firmly optimistic about AI-led technology stocks as the core market theme.
The K-shaped structure of rising new drivers and declining old drivers is expected to see a temporary narrowing of its gap after a period of expansion.
The upward trend for tech stocks remains intact, though periodic adjustments are expected with technological iterations and investment cycles, during which funds may briefly flow into lower-valued non-tech stocks, causing short-term convergence in the K-shaped gap.
However, from a medium-term cycle perspective, this convergence is likely temporary and minor; a true balance in the gap may only emerge after about two years, following the gradual release of the current tech investment cycle, when upstream AI investment growth peaks, AI transformation across other industries expands fully, societal benefits from AI begin restorative growth, new market drivers become conventional, and the economic cycle enters a stable growth phase, gradually weakening the K-shaped cycle characteristics.
Tianfu Securities: Tech Sector's Medium-Term Trend Persists, Focus on Stocks with Reasonable Valuations and Underexploited Earnings
Tianfu Securities notes that average daily trading volume in June remained above 3 trillion yuan, with the market showing overall resilience despite multiple expectations for tighter liquidity.
As the mid-year earnings window approaches, the core question for the second half is whether the tech rally can sustain its momentum or if a phase of style rebalancing will occur.
Strategically, it advises maintaining a baseline of not chasing highs.
While the medium-term trend for the tech direction remains, internal differentiation should be expected; focus should be on stocks with reasonable valuations and earnings that are not excessively overextended.
For non-tech sectors, attention can be paid to pharmaceuticals and non-bank financials, which may have potential for periodic performance in volatile markets.
It cautions against blindly bottom-fishing in defensive sectors that have not yet stabilized, especially income-oriented assets, and warns of short-term pullback risks due to high crowding, advising close monitoring of performance verification during the July earnings window.
Everbright Securities: Short-Term Market Indices May Remain Volatile, Hotspot Logic Shifts to Earnings Verification
Everbright Securities believes that with the market's strong recovery, sustained high turnover, and continued policy support, alongside the absence of new major negative factors internally or externally, confidence in a market floor and numerous structural opportunities is strengthening.
However, external geopolitical disturbances and expectations for Federal Reserve rate hikes continue to cause interference.
Coupled with extreme capital concentration in hard-tech concepts, short-term market indices may experience repeated fluctuations.
Furthermore, as July brings the half-year forecast window, the core logic for market hotspots is transitioning from valuation expansion to the verification of actual earnings quality.
Caixin Securities: During Market Transition, Capital Flow Logic May Gradually Yield to Industry Logic, Shifting from Liquidity-Driven to Earnings-Driven
Caixin Securities suggests the probability of a continuous decline in major indices in the short term is low, and investors can still participate in structural market opportunities.
The market may rotate based on a narrowing focus within the tech sector and repeated activity in lower-positioned sectors.
From a medium-term view, July is a transitional phase where the logic of capital flows may gradually give way to industry logic, and liquidity-driven moves may progressively shift towards being earnings-driven.
However, the substantial gains in the tech sector earlier have already priced in high earnings expectations; whether these growth rates materialize as expected remains somewhat uncertain.
The market in July is expected to be in a state of significant volatility, recommending a balanced allocation strategy.
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