Changpeng Wan
Market Open Snapshot
China’s A-share market opened divided on July 23, 2025, with the Shanghai Composite Index rising 0.20% to 3,275.41 points. Meanwhile, the Shenzhen Component Index edged up just 0.01%, while the ChiNext Index dropped 0.12% – reflecting cautious investor sentiment ahead of key economic data releases.
Sector Performance Breakdown
- Top Performers: Super hydropower (+1.8%), coal mining (+1.5%), and non-ferrous metals (+1.3%) sectors
- Declining Sectors: Innovative pharmaceuticals (-0.9%), CPO technology (-0.7%), and military-industrial stocks (-0.6%)
Institutional Perspectives
Leading brokerages offered contrasting sector assessments that illuminate this volatility in Chinese markets:
Huatai Securities on Metals Rally
“Domestic anti-involution policies combined with global fiscal stimuli created perfect conditions for metals,” noted Huatai metals strategist Wang Lin (王林). Key trends driving momentum:
• Lithium/cobalt prices rebounded from cost floor with new catalysts
• Aluminum benefits from dividend policies; copper from growth narratives
• Steel industry showing improved margins from raw material adjustments
CICC: Nuclear Fusion Acceleration
CICC technology analyst Zhang Wei (张伟) highlighted breakthroughs:
“China’s first commercial linear fusion device achieving plasma ignition marks a watershed. The Shanghai Stock Exchange’s nuclear fusion salon signals institutional recognition of this energy disruptor.” Investment implications:
• Tokamak tech: Focus on superconducting materials/magnets
• Z-FFR systems: Prioritize specialized power suppliers
• Policy backing ensures sustained R&D funding
TF Securities Banking Outlook
Despite recent 3.41% sector dip, TF’s banking head Li Min (李敏) remains bullish:
- Interest margins stabilizing post-Q2 2025 liquidity measures
- Non-interest income growth accelerating through fintech partnerships
- Local government bond swaps relieving balance-sheet pressure
Preferred exposures:
1. Regional banks – Chengdu Bank, Changshu Bank
2. State-owned giants – ICBC, Agricultural Bank of China, Bank of China, Postal Savings Bank
Macroeconomic Backdrop
Five critical factors influencing market directions:
Policy Tailwinds
Beijing’s “anti-involution” framework prioritizing industrial upgrading over capacity growth favored value-heavy sectors. Meanwhile, monetary authorities maintained accommodative stance – PBOC Governor Pan Gongsheng (潘功胜) recently flagged “patient liquidity support” until recovery firms.
Global Context
As the Fed prepares for potential September rate cuts (CME FedWatch data: 67% probability), yield-seeking capital continues rotating toward Chinese dividend plays. This dynamic bolstered coal and utility stocks during the session.
Investor Strategies
Sector Allocation Guidance
For risk-tolerant investors:
• Metals/energy: Position in lithium, rare earths, nuclear supply chains
• Value rotation: Accumulate banking stocks on dips
Technical Considerations
Shanghai Composite’s holding above 3,250 support suggests consolidation before Q3 earnings season. Critical resistance lies at 3,300 – a breakout would require volume expansion beyond current 40-day average.
Looking Forward
The Chinese stock market divergences signal ongoing structural realignment rather than directional indecision. Two emerging themes dominate institutional radar:
• Policy-supported innovation clusters (clean energy, advanced materials)
• SOE reform beneficiaries leveraging state-backed advantages
TF Securities’ analysis concludes dividend yields over 5% among state banks provide defensiveness if growth slows unexpectedly. Traders should accumulate quality names in oversold sectors, particularly selective biotech innovators approaching support levels.
