To The Moon

Today's A-share market displayed a divergent pattern, with the ChiNext Index briefly falling over 2% intraday. The technology sector faced overall pressure, while communications and building materials were among the leading decliners. Market turnover saw a slight decrease to 3.1 trillion yuan.

The market has entered the interim earnings reporting season, with its primary driver shifting from sentiment to actual performance. This transition, coupled with previously high crowding in the technology sector, has led to short-term market volatility. Sectors with solid earnings support that have lagged in the previous rally may attract capital inflows.

Externally, the weaker-than-expected US non-farm payrolls data has cooled expectations for interest rate hikes, providing a marginal positive for global liquidity conditions. Overall, the market is likely to maintain its structurally divergent pattern. A balanced allocation strategy may be prudent. While the technology theme could stage a comeback in the medium term, investors should focus on sectors with robust fundamentals during this earnings verification window.

Key Market Developments

New A-Share Trading Rules Take Effect on Shanghai, Shenzhen, and Beijing Exchanges

On July 6th, the new trading rules for the Shanghai, Shenzhen, and Beijing Stock Exchanges officially came into effect. Key adjustments include: extending the application of post-market fixed-price trading from just the STAR and ChiNext boards to all A-shares and ETFs; adjusting the daily price limit for ST and *ST stocks on the Shanghai and Shenzhen main boards from 5% to 10% (maintaining 20% for risk-warning stocks on ChiNext and STAR, and 30% for Beijing Exchange); changing the Shanghai Stock Exchange's fund closing mechanism from continuous auction to closing call auction; introducing a market maker system on the Shenzhen Exchange's ChiNext board; and launching post-market fixed-price trading on the Beijing Exchange. Securities firms have simultaneously revised their risk disclosure documents, with the new versions also taking effect.

Brief Analysis: This revision of trading rules is a key supporting measure following the full implementation of the registration-based IPO system. Expanding post-market fixed-price trading to all A-shares and ETFs provides a rebalancing channel for medium- to long-term funds, helping to reduce intraday trading impact. Widening the price limit for main board ST stocks to 10% compresses the arbitrage space for "shell resources," guiding the market to focus more on fundamentals. Introducing a market maker system on the ChiNext board helps improve pricing efficiency and market liquidity. Overall, the new rules aim to enhance market pricing efficiency, liquidity, and stability, which is conducive to attracting medium- and long-term capital into the market.

PBOC Conducts 1 Trillion Yuan Outright Reverse Repo, Ending Consecutive Contraction Process

On July 6th, the People's Bank of China conducted a 1 trillion yuan outright reverse repo operation via a fixed-quantity, interest-rate bidding, multi-price winning method, with a maturity of 3 months (91 days). Given that 800 billion yuan of this maturity was set to expire within the month, this operation resulted in a net injection of 200 billion yuan, ending a three-month consecutive contraction process for this maturity.

Brief Analysis: This operation by the PBOC is a significant signal of a shift in monetary policy from the previous moderate reduction to increased liquidity provision, ending the three-month contraction trend. With substantial government bond supply pressure in July, the PBOC's timely injection of medium-term liquidity both safeguards government bond issuance and supports bank credit extension. The importance of this signal far exceeds the scale of the single-day operation itself, as it helps stabilize funding cost expectations and alleviates market concerns about a marginal tightening of liquidity.

Ministry of Science and Technology Outlines Six Key Future Industry Innovation Directions

On July 6th, the Minister of Science and Technology stated in an interview that efforts will be made to deeply integrate technological and industrial innovation and accelerate the construction of a modern industrial system. The development of strategic emerging industry clusters such as new energy, new materials, aerospace, and the low-altitude economy will be accelerated. Future industries will be strategically positioned, with a focus on promoting quantum technology, bio-manufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied AI, and sixth-generation mobile communication (6G) to become new growth drivers. The development of technology finance will be accelerated to support capital investment in early-stage, small, long-term, and hard-tech projects.

Brief Analysis: Clarifying these six future industry innovation directions is a key signal for implementing the "15th Five-Year Plan" science and technology innovation strategy. The six areas—quantum technology, bio-manufacturing, hydrogen and nuclear fusion energy, brain-computer interfaces, embodied AI, and 6G—all represent cutting-edge hard-tech fields. This policy direction is expected to guide capital and resources towards these sectors, accelerating the process of technological achievement transformation and industrialization. Strategic emerging industries like new energy, new materials, aerospace, and low-altitude economy, along with the six future industry directions, are likely to receive sustained policy attention.

Market Performance Recap

On July 6th, the three major A-share indices closed lower. At the close, the Shanghai Composite Index was at 4041.24 points, down 0.06%; the Shenzhen Component Index was at 15416.80 points, down 1.16%; the ChiNext Index was at 3948.86 points, down 1.77%; and the STAR 100 Index was at 2193.34 points, down 2.36%.

Among Shenwan primary industries, coal, agriculture, forestry, animal husbandry & fishery, and petroleum & petrochemicals were among the top gainers, rising 4.11%, 2.57%, and 2.43% respectively. Building materials, communications, and machinery & equipment were among the top decliners, falling 5.75%, 3.05%, and 1.97% respectively. 1,876 stocks advanced, while 3,542 declined.

Capital Flows

Market turnover was 3112.655 billion yuan, down from the previous trading day. The balance of margin trading and securities lending closed at 3003.337 billion yuan last Friday, also down from the previous session.