Changpeng Wan
Market Performance Overview
Chinese equities registered significant gains on July 22, 2025, with the Shanghai Composite Index rising 0.62%, Shenzhen Component gaining 0.84%, and ChiNext advancing 0.61%. Crucially, all three major benchmarks achieved their highest closing levels since January, demonstrating remarkable resilience in Asia’s largest equity market.
Historic Trading Momentum
Total turnover across Shanghai and Shenzhen exchanges surged to 1.89 trillion yuan ($260 billion), marking a substantial 193 billion yuan increase from the previous session. This exceptional trading volume – the highest since April – highlights intensified market participation following recent policy stimulus measures from Beijing.
Infrastructure Stocks Surge
Construction and materials sectors dominated market gains:
– Super hydropower companies surged with China Gezhouba Group leading gains
– Engineering machinery manufacturers rose 2.8% collectively
– Coal producers jumped 3.1% amid tightening supply
– Cement manufacturers gained 2.5% on infrastructure project approvals
Capital Rotation Patterns
Market analysts identified distinct capital migration trends:
– Institutional funds shifting from technology to value stocks
– Retail investors favoring state-owned enterprises
– Foreign investors lifting holdings in renewable energy subsectors
Sector-Wise Performance Breakdown
The session revealed stark divergence between traditional and new economy sectors, with infrastructure-related stocks significantly outperforming technology counterparts.
Outperforming Sectors
– Coal producers rallied, with Shanxi Coking Coal Energy Group gaining 9%
– Engineering machinery leaders including Sany Heavy Industry saw renewed buying
– Cement suppliers extended gains amid reports of provincial infrastructure spending
Declining Sectors
Technology companies faced broad-based selling pressure:
– Zhipu AI-linked tech stocks retreated 1.9%
– Semiconductor components manufacturers declined 2.1%
– Software developers contracted, led by cybersecurity firms
– Gaming stocks remained pressured by regulation concerns
Market Breadth Indicators
Despite index gains, broader signals suggested consolidation:
– Declining stocks outnumbered advancers 2,700 to 1,900
– Fifth consecutive session with over 100 limit-up stocks
– Volatility index (China VIX) dropped to 1-month lows
Prominent Market Themes
Two powerful themes drove trading strategies: sustainable energy policies and industrial policy shifts.
Super Hydropower Momentum
Sustainable energy firms extended rallies on national policy tailwinds:
– State Council’s renewable project approvals accelerated
– Large-scale hydropower investments in southwest provinces
– Water resource integration projects getting priority funding
Anti-Dumping Sector Strength</h3
Industrial sectors resilient to price wars saw major inflows:
– Steel producers benefited from industry consolidation policies
– Domestic coal producers advanced amid import restrictions
– Cement manufacturers leveraged transport infrastructure projects
Technical Assessment
Market technicians noted crucial chart developments:
– Shanghai Composite cleared psychological 3,500 barrier
– Momentum oscillators approached overbought territory
– Resistance zones tested near February highs
Capital Flows Analysis
Trading desk reports revealed:
– Northbound flows via Stock Connect hit $950 million
– Retail margin debt grew 3% intra-day
– Mutual fund net subscriptions reached July highs
Policy Catalysts
Multiple government initiatives influenced market direction:
– PBOC liquidity injections via MLF operations
– State-owned enterprise buyback acceleration notices
– Provincial infrastructure tender announcements
Outlook and Strategic Implications
Market stabilization appears intact but vulnerable to:
– Earnings report surprises during August reporting season
– Commodity price volatility
– Technology sector regulatory developments
Monitoring policy signals remains crucial for navigating market rotations.
Smart Position Adjustments Required
Traders should consider:
– Rotation targets: Infrastructure exposures over tech
– Hedging strategies: Options volatility premiums
– Position sizing: Discipline amid momentum moves
Future Market Triggers
Key catalysts ahead:
– Upcoming Politburo economic meeting conclusions
– July PMI data release schedule
– Federal Reserve rate decision impacts
Smart navigation of rotations remains paramount for capitalizing on this evolving bull market phase.
