After several consecutive days of declines, the market welcomed a strong rebound.
On the morning of July 21, A-shares staged a "V-shaped reversal," with multiple indices subsequently surging rapidly. At the close, the STAR 50 Index soared 10.73%, marking its highest single-day gain in nearly a year. The three major indices all closed in positive territory, with the Shanghai Composite Index rising 1.79%, the Shenzhen Component Index climbing 4.81%, and the ChiNext Index advancing 7.05%.
The combined trading volume for the three major exchanges was 2.97 trillion yuan, an increase of 256.1 billion yuan from the previous day. At the individual stock level, over 3,100 stocks rose, with more than a hundred hitting their daily upside limit. As the vanguard of the rebound, the semiconductor industry chain saw a full-scale surge, led by sectors such as equipment, memory, wafers, and HBM. Sectors like oil and gas, banking, coal, and motorcycles were among the decliners.
Boosted by the semiconductor rally, related thematic ETFs surged sharply, with as many as 73 products gaining over 10% intraday. Among them, Penghua STAR Semiconductor Equipment ETF, ChinaAMC STAR Semiconductor ETF, Huatai-PineBridge STAR Semiconductor Equipment ETF, and East Money STAR Composite Index ETF all rose over 18%. GF, Huaan, and Huabao's STAR Chip ETFs gained over 15%.
Triple Factors in Resonance
Today's powerful rebound in A-shares stemmed from the resonance of three factors.
First, multiple sources of funds announced market entry. Since July 19th, positive signals have emerged frequently from the capital side, ranging from "national team" and insurance capital increases in holdings to listed company buybacks and self-purchases by public and private funds.
Jinying Fund's analysis notes that the sustained entry of stabilizing funds has effectively boosted market confidence. "During the previous sustained and significant market decline, investors' risk-averse sentiment was concentratedly released, and A-share valuations gradually returned to a reasonable range. Meanwhile, major capital players seized the opportunity to enter the market, not only supporting market liquidity but also laying a solid foundation for market stabilization."
Wind data shows that over the last two trading days, multiple broad-based ETFs experienced significant volume expansion. On July 20th, broad-based ETFs saw a combined net inflow of 59.061 billion yuan. Among them, ChinaAMC STAR 50 ETF, Huatai-PineBridge CSI 300 ETF, and E Fund ChiNext ETF recorded net inflows of 13.7 billion yuan, 12.52 billion yuan, and 9.4 billion yuan, respectively. On July 21st, these three broad-based ETFs remained active, with trading volumes reaching 17.322 billion yuan, 15.266 billion yuan, and 12.895 billion yuan respectively.
Second, policy support. On July 20th, China Securities Regulatory Commission (CSRC) Chairman Wu Qing presided over an investor symposium, clearly stating the commitment to "fully maintain stable market operation." Bosera Fund believes that after the technology sector experienced a full adjustment earlier, releasing valuation pressure, coupled with the resonance of policy and capital factors, triggered today's concentrated rebound in the technology growth sector.
Third, the stabilization and rebound of overseas markets provided a favorable external environment for this round of A-share recovery. Jinying Fund points out that the global equity market previously underwent a rapid deleveraging and relatively full adjustment process, with indices in many regions experiencing deep valuation corrections, establishing an objective basis for stabilization and rebound.
Overseas markets, represented by the Korean stock market, took the lead in initiating a recovery. After falling over 30% from its historical peak, effectively clearing substantial risks, the Korea Composite Index (KOSPI) today saw a reversal from its decline, rebounding sharply by 3.56%, led by core Korean tech giants.
Jinying Fund states that alongside the collective warming of the global technology sector, it provided strong support for the synchronized rebound of A-share technology stocks.
The Most Panicked Stage Is Likely Over
Regarding whether the technology sector has emerged from the gloom, institutions provided analysis from short, medium, and long-term perspectives.
"After the rapid adjustment earlier, the crowdedness of the technology sector has been significantly digested," believes Bosera Fund. After consecutive days of decline in margin financing balances, the deleveraging process is nearing its end. Statements from central SOEs increasing holdings and insurance capital's commitment to add positions have released clear signals of long-term capital entering the market, supporting the valuation floor for the technology sector.
Jinying Fund indicates that the current market is still in the tail end of the deleveraging and sentiment-grinding stage. With the continuous inflow of allocation funds and significant clearance of panic-driven selling, follow-up attention can be paid to relatively good investment opportunities within the short-term oversold rebound.
"In the short term, the positive release of policy signals has to some extent alleviated the market's liquidity shock and panic sentiment. The concentrated deleveraging of margin financing has relatively eased, but the market still needs time to find its bottom. After the index's single-day overshoot, volatility in the technology sector remains high, and follow-up requires lowering market volatility." China Europe Fund suggests focusing on the sustainability of the 'national team' holdings increase, the pace of margin financing and quantitative fund replenishment, and performance verification during the intensive mid-year report disclosure period.
"After this round of oversold rebound, a new medium-term market cycle still awaits new heavyweight industrial catalysts. The Q2 earnings reports from overseas cloud providers in late July are a key node for verifying returns on capital expenditure." Jinying Fund analyzes that, from a medium-term perspective, subsequent differentiation clues within the AI industry chain depend on whether specific segments can maintain their rising share of demand and continued supply bottlenecks. For links where supply bottlenecks may loosen, valuation centers might face downward revisions. AI technology investment still needs to focus on core links with relatively tight supply and demand.
In the view of Bosera Fund, industrial trends such as the expansion of AI computing demand and semiconductor import substitution have not changed due to short-term adjustments. The growth resilience of technology leaders has been preliminarily verified in mid-year report performances. The short-term market may still experience fluctuations, but the most panicked stage for the technology sector is likely over. Subsequently, with the continuous landing of industrial catalysts, the technology growth direction still possesses medium- to long-term allocation value.
This article is from "*Caijing* New Media," author: Jiang Jinli, editor: Jiang Shizhou
