Text | Market Value Observation
Entering July, global tech stocks suddenly weakened. South Korea's memory chip leader was the first to suffer concentrated selling, which quickly spread to markets in the US and Japan. A-share tech sectors also came under pressure, with the STAR 50 and ChiNext indices falling successively.
However, under external shocks, A-shares have not lost support. The prosperity logic of the tech industry has not reversed, and long-term funds and market stability forces have begun to step in. At the same time, the consumer, cyclical, and financial sectors are also accumulating repair momentum.
This round of adjustment is both a risk release and a test of the true resilience of A-shares.
01 Tech Adjustment and Resilience
From April to the end of June this year, the A-share tech track experienced a vigorous rally. This rally was anchored on two logics: first, reflecting high performance prosperity. In the first half of the year, net profit growth rates in core tech tracks such as optical modules, chip manufacturing, packaging and testing, and optical fiber cables were mostly above 50%.
Data from the National Bureau of Statistics confirms this — in the first five months, profits of the computer, communication, and other electronic equipment manufacturing industry increased by 103.9% year-on-year, contributing 43% to the growth of industrial profits.
Second is the spillover effect of the overseas tech rally. In particular, the rise and fall rhythm of A-share tech and South Korean tech stocks is highly synchronized.
But since July, the trend has changed abruptly. A-share tech has been continuously adjusting, and the core reason is not a problem with its own fundamentals, but the transmission of external risks such as deleveraging in South Korean stocks.
However, the market resilience of A-share tech and South Korean tech is not on the same level, A-shares do not have a basis for a systemic decline. The most core difference lies in the vastly different structure of the tech tracks.
Samsung Electronics and SK Hynix account for about 50% of the total market capitalization of the Korea Composite Stock Price Index, and about 60% of the market's leveraged funds are bet on these two stocks. Thus, the entire South Korean stock market is deeply hijacked by the memory chip track, and any withdrawal of leveraged funds or flaws in performance growth expectations can trigger violent selling.
In contrast, A-share tech encompasses many tracks such as computers, communications, and electronics. Even narrowing down to the semiconductor sector, the industry chain covers multiple links including materials, equipment, design, manufacturing, and packaging and testing.
More importantly, the A-share tech line has a dual narrative logic. One is anchored to the global tech giant supply chain — "Yi Zhong Tian" tied to chain leaders like Nvidia, trading global AI massive capital expenditure. The other is anchored to domestic substitution, such as leaders like Haiguang Information, SMIC, and Cambricon targeting domestic computing infrastructure.
One internal and one external, this is more resilient than the single narrative centered on the memory super cycle in South Korean stocks.
At the same time, the fundamental logic of performance in core areas of the tech track has not been falsified.
For example, in the optical module field, Eoptolink's net profit attributable to the parent company in the first half of the year reached 7 to 8 billion yuan, nearly doubling again on the high base of a 235% surge in the same period last year. In the optical fiber cable field, Yangtze Optical Fibre's net profit attributable to the parent company reached 2.4 to 3 billion yuan, a year-on-year increase of 711% to 914%.
Thus, this decline in A-share tech is directly related to the transmission of external risks, and the risks have been released to a considerable extent. Notably, Citigroup released a report on July 20, downgrading South Korean stocks and upgrading Chinese stocks, which also indicates a significant difference in resilience between the two markets.
In fact, after consecutive adjustments, A-share tech stocks saw a recovery on July 21 — the STAR 50 surged 10.7%, and the ChiNext Index rose 7%.
02"National Team" Sets the Direction
Facing market volatility, the "national team" did not hesitate to step in again to support the market.
Specifically, China Guoxin announced that its subsidiary Guoxin Investment has entered the market with over 50 billion yuan. China Chengtong and its platforms have cumulatively purchased nearly 10 billion yuan, and stated that they will continue to use their own funds and stock repurchase and shareholding increase special relending to increase holdings of state-owned central enterprises and technology company stocks and ETFs.
At the listed company level, central enterprises such as Aluminum Corporation of China and CRRC Corporation announced share buybacks, while securities firms like Huaan Securities and Guolian Minsheng initiated a new round of buybacks.
At the institutional level, billion-level quantitative private equity firms such as Lingjun Investment and Pingfanghe Investment announced self-purchases. Insurance funds including Ping An Insurance, China Pacific Insurance, PICC, New China Insurance, and China Life Insurance have successively expressed support for the capital market and will continue to increase the allocation ratio of equity assets.
Among them, China Life Asset Management Company has actively allocated in recent days, with a single-day net purchase of equity assets in the A-share and on- and off-market fund markets exceeding 10 billion yuan.
"National Team" takes the lead, and other market participants follow suit, easily forming a strong upward synergy. Especially the heavy intervention of the "National Team" has very positive significance for the market, mainly reflected in three aspects.
First, increasing holdings with real money to alleviate some market liquidity pressure through concrete actions.
Second, guiding market expectations is more critical. The "National Team" has a strong voice in the A-share market. Moving against the trend at this time sends a signal of a phased bottom to the market, which has a strong demonstration effect for institution-dominated markets.
Currently, public offering active equity, passive ETFs, insurance funds, northbound and QFII funds hold over 3 trillion yuan each, with a total scale exceeding 15 trillion yuan, accounting for about 40% of free float market value. Compared to the retail-dominated market before 2015, these institutional investors pay more attention to macro policies, fundamentals, monetary liquidity, and other market pricing factors.
Generally speaking, the intervention of the "National Team" is regarded as a counter-cyclical adjustment of the stock market, often having an effect similar to a stabilization fund. The movements of these large funds often have a stronger demonstration effect on institutional investors (with weaker emotional influence), and are more likely to drive long-term funds such as social security, insurance funds, and central enterprise buybacks to form a resonance.
Third, historical experience has proven that the market is often at a phased bottom after the "National Team" enters.
Since 2008, in multiple counter-cyclical adjustments by the "National Team," although short-term trends varied, over a longer period, following the rhythm of the "National Team" has not resulted in poor win rates. Especially after the two interventions on September 24, 2024, and April 7, 2025, the market quickly stabilized and experienced a long trend-driven rally.
▲Source: Cailianshe
It is worth noting that the policy toolkit has another innovative tool for stabilizing the capital market—the special relending for stock repurchase and shareholding increase (established in September 2024, with an initial tranche of 300 billion yuan), which incorporates capital market stability into the macro policy adjustment framework.
This, together with the 500 billion yuan swap facility quota, is coordinated for deployment, with a total pool of 800 billion yuan. Currently, the actual utilization rate is not high, and the two combined still have hundreds of billions of yuan in reserve funds available.
Therefore, this intervention is not a simple support, but a clear release of policy signals.
03 Three Lines Supporting the Market, Where Does the Confidence Come From?
Apart from the capital flow logic, the A-share market has sufficient resilience, and endogenous upward momentum is not lacking.
By strategy classification, the A-share market can be divided into four core categories: finance, consumption, cyclical, and technology, and their combined force determines the market direction. Not only technology, but also consumption, cyclical, and financial lines all have strong endogenous repair momentum.
First, look at consumption. From a macro perspective,CPI has stood at 1% for five consecutive months, while in the previous three years it fluctuated between -0.8% and 0.8%.The continuous rise in consumer goods prices means that the earnings difficulties of consumer stocks have begun to show marginal improvement.For consumer stocks that have fallen for five years and are at a decade-low valuation, this will be a beam of light illuminating the dark night.
▲CSI BaijiuPE Trend Chart, Source: Wind
From the corporate perspective,Kweichow Moutai, as a bellwether for baijiu and even the entire food and beverage sector, has raised prices twice this year, with a cumulative increase of over10%. This move indicates that after years of inventory destocking in the baijiu industry, channel inventory has basically returned to normal levels, the deep adjustment of baijiu is nearing its end, and a recovery momentum is emerging.
In the first half of this year,the retail sales of tobacco and alcohol performed strongly, reaching a cumulative354.7 billion yuan, a year-on-year increase of 13.2%.This alsoconfirms that the most difficult period for baijiu consumption may have passed.
Next, look at cyclical sectors led by aluminum,which may face a triple resonance.
First, high earnings prosperity. In the first five months, the profit of non-ferrous metals increased by117% year-on-year, even faster than technology sectors like computers. At the corporate level, Yunnan Aluminium and Tianshan Aluminium reported net profit attributable to parent company growth of 171%-182% and 101.5% year-on-year, respectively.
Second, there may still be price increase expectations in the second half of the year. On one hand,global aluminumremains in a tight balance—demand, driven by new energy vehicles, electricity, and home appliances' "aluminum replacing copper," maintains overall growth of 3%-5%, while on the supply side, China firmly locks in a production capacity ceiling of 45 million tons. Against this backdrop, global aluminum inventories continue to decline, with LME aluminum inventories hitting multi-year lows.
▲LME Aluminum Total Inventory Trend Chart, Source: Wind
On the other hand, the Fed's previously aggressive rate hike expectations are subject to significant uncertainty. For example,the June non-farm payroll and CPI data both came in below expectations,and the pace of rate hikes may be delayed.
Third,since the end of January, aluminum companies have generally experienced maximum drawdowns of over 40%. Currently, leading companies such as Aluminum Corporation of China, Yunnan Aluminium, and Tianshan Aluminium have PE ratios (2026E) of only 6-7 times. With high earnings prosperity, price increase expectations, and low valuations,there is naturallyroom for recovery in the future.
In fact, besides aluminum, metals such as gold, silver, copper, and lithiumalso have similar logic.
Finally, look at the financial sector. Banks, as typical dividend assets, have stable fundamentals and high dividend yields. Brokerages and insurance companies, benefiting from a hot capital market, generally have high earnings growth, yet their valuations are at multi-year lows.
Of course, China's technology industry is developing rapidly, especially in sectors such as semiconductors and AI, where continuous technological breakthroughs have been achieved, enabling domestic substitution in multiple fields and expanding exports to capture overseas market share.The fundamental performancecontinues to improve, and long-term valueremains solid.Combined with the endogenous recovery momentum of the three major asset classes—consumption, cyclical, and financial—A-shares possess a very strong resilience foundation.
Overall,this round of technology adjustment is caused by external risk transmission, rather than a collapse in industry prosperity."National Team"has decisively stepped in to stabilize the expectation floor,and as the endogenous momentum of consumption, cyclical, and financial sectors gradually takes over, the market may soon return to a stable state.
