To The Moon

Today, the three major indices in China experienced a pattern of rising before falling back. The Shanghai Composite Index closed with a slight decline of 0.06%, while the Shenzhen Component Index and the ChiNext Index saw larger drops, both falling by more than 1%.

The total market turnover was 3.1 trillion yuan, a decrease of over 90 billion yuan compared to the previous trading session. However, with total turnover still above the 3 trillion yuan mark, it indicates that market activity remains relatively high and liquidity is being maintained at a good level.

Looking at the sector performance, AI and technology stocks underwent a downward adjustment today, with PCB stocks falling collectively. The memory sector also showed instability; despite a stellar earnings report from Jiangbolong, its stock price still followed a pattern of rising and then retreating, while GigaDevice continued its correction with a significant drop of 3.46% today. Additionally, stocks like Zhongji Innolight and Industrial Fulian also declined.

In contrast, "old economy" stocks rose today. Sectors such as biopharmaceuticals, major consumer goods, and coal staged a rebound. Innovative drugmakers led the gains in the biopharma sector, with HENGRUI PHARMA (ASX: 600276), Pharmaron, and BeiGene all surging by more than 3%. This rebound in innovative drug stocks should not be underestimated. Taking HENGRUI PHARMA's share price of 45.26 yuan on June 9th as a starting point, the stock has already rebounded by 25% in less than a month.

The major consumer sector also recovered today, with the CSI Consumer Staples Index rising nearly 2 percentage points. Leading the gains within this sector was the animal husbandry industry, with Wens Foodstuff Group, Muyuan Foods, and Zhengbang Technology all rising by 4%. The likely catalyst for these gains is the recent rebound in pork prices, which have already returned to the "10-yuan era." Other consumer stocks also saw increases, with Kweichow Moutai rising 1.04% and Inner Mongolia Yili Industrial Group gaining 1.91%.

After experiencing a correction lasting roughly a month, coal stocks also achieved a significant rebound today. Yankuang Energy Group jumped 5.62%, and China Shenhua Energy rose 2.97%. Furthermore, the major financial sector also recovered, with insurance, securities, and banking stocks all posting gains of varying magnitudes.

Today's market picture is distinctly different from the scene in recent times. AI and technology stocks have begun a downward adjustment, while traditional blue-chip and white-chip stocks have rebounded and recovered.

The recent period indeed represents a relatively critical juncture. There have been several instances of this pattern where "old economy" stocks rise while AI and tech stocks fall. Capital is continuously testing the market's reaction, suggesting that the market may be on the verge of a significant shift, and the prevailing investment style might truly be changing.

As half-year earnings reports are released, the market has been closely watching whether the high expectations for AI and tech stocks, which have already risen to elevated levels, will be met. If expectations are fulfilled, the short-term decline might not be too severe. However, if results are merely average or fall significantly short of expectations, share prices could face the risk of a substantial drop.

The situation for "old economy" stocks is the opposite. Market expectations for them are already quite poor, and this is largely reflected in their current share prices. However, if their actual performance is not as bad as feared, or even exceeds expectations, they are very likely to experience a wave of valuation-repair driven gains.