The market jumped initially and then pulled back throughout the day, with the Shanghai Composite Index losing the 3,500-point level it had briefly gained. The financial sector remained active throughout the day [Stock Market Review].

The market jumped initially and then pulled back throughout the day, with the three major indices showing mixed changes. The Shanghai Composite Index briefly surpassed the 3,500-point mark but later lost it. The total trading volume on the Shanghai and Shenzhen stock exchanges reached 1.51 trillion yuan, an increase of 51.2 billion yuan compared to the previous trading day. On the futures market, hot topics were rather scattered, with more stocks declining than rising. Over 3,300 stocks across the market fell. From a sector perspective, big finance stocks oscillated and strengthened, with five bank stocks, including Industrial and Commercial Bank of China, hitting new all-time highs. Nanhua Futures and others surged by the daily limit. Short drama concept stocks performed actively, with Huanrui Century hitting the daily limit. New-type urbanization concept stocks initially surged, with New City surging by the 20CM daily limit. On the downside, non-ferrous metal concept stocks adjusted, with CMOC falling more than 5%. By the close, the Shanghai Composite Index fell 0.13%, the Shenzhen Component Index fell 0.06%, and the ChiNext Index rose 0.16%.

Sector Perspective

On the sector front, big finance stocks remained active repeatedly. Multi-finance and stablecoin concept stocks led the gains, with Yuexiu Capital, Nanhua Futures, Yong'an Futures, Topsec, and others surging by the daily limit. On the news front, Eddie Yue, the Chief Executive of the Hong Kong Monetary Authority, had earlier stated that the number of stablecoin issuer licenses issued would not be large. However, at least nine institutions in the market have expressed interest in applying or are reportedly exploring the possibility, including three institutions participating in the HKMA's stablecoin issuer "sandbox," all of which plan to issue Hong Kong dollar-pegged stablecoins.

On the other hand, bank stocks became active again, with Industrial and Commercial Bank of China, Agricultural Bank of China, Postal Savings Bank of China, China CITIC Bank, and Bank of Beijing hitting new all-time highs. Xiamen Bank, Chongqing Rural Commercial Bank, Zhangjiagang Rural Commercial Bank, and Bank of Lanzhou also ranked among the top gainers.

China Galaxy Securities stated in a recent research report that the current rally in the banking sector is mainly driven by the following three factors: 1) In a low-interest-rate environment, the dividend value of banks remains attractive to medium and long-term funds. 2) The repair of underweight positions in public funds and the expansion of broad-based indices have also brought incremental capital inflows to banks, with broad-based index weight stocks represented by the CSI 300 Index and high-quality regional banks with better fundamentals benefiting more significantly. 3) The accelerated conversion of bank convertible bonds into shares has brought short-term opportunities.

Short drama concept stocks performed actively, with Huanrui Century hitting the daily limit. Baina Qiancheng, Zhangyue Technology, Insight Group, Sichuan Online Media, and other stocks ranked among the top gainers.

According to statistics, as of 2024, the user scale of micro-short dramas in China has exceeded 600 million people, demonstrating strong market appeal. With rapid development momentum, the market size continues to expand. The "2024 China Micro-Short Drama Industry Research Report" shows that the market size of micro-short dramas in China climbed to 50.5 billion yuan in 2024, surpassing the annual box office revenue for the first time. It is expected that the market size will reach 63.43 billion yuan in 2025. However, it should be noted that throughout the day, the short drama sector also showed a certain degree of jump initially and then pull back, with only Huanrui Century successfully sealing the board. If there are no more significant events (or news) to catalyze it in the future, its continuity remains to be further observed.

New-type urbanization concept stocks initially jumped, with Xinchengshi, Guosheng Technology, and Meili Ecological hitting the limit-up, while Kanshe Shares and China Railway Assembly led the gains. On the news front, the General Office of the State Council issued the "Opinions on Improving the Regular Promotion Mechanism for Key Tasks of 'Efficiently Accomplishing One Thing'." The document emphasized encouraging regions and departments to leverage local characteristics and industry features, focusing on high-frequency matters from the perspective of enterprises and the public, and expanding application scenarios in areas such as life services, industrial support, engineering construction, and urban renewal. Overall, new-type urbanization and its underlying infrastructure sector exhibit relatively clear valuation advantages, and under the current market preference for high-to-low rotation, core leading stocks may still have room for repeated activity.

Stock-wise,

despite more decliners than advancers overall today, the speculative fervor around consecutive limit-ups showed signs of recovery, with the number of such stocks rising further to 18, including all four stocks that achieved four consecutive limit-ups yesterday. Stablecoin concept stocks remained active, with popular high-flyer Xinyada rebounding to a limit-up today, while Jingbeifang hit new highs despite failing to close at the limit-up. The power sector also extended its strength, with Guiguan Power surging to a limit-up in the afternoon session following the lead of Huaguang Huanneng (5 consecutive limit-ups) and Huayin Electric Power (6 limit-ups in 7 days). Huadian Liaoneng and Shaoneng Shares also saw some recovery. Additionally, the innovative drug sector bottomed out during the session, with Medytox, Jiuzhitang, and Saily Medical leading the gains, while core stock Hengrui Pharmaceuticals rose over 7% on heavy volume.

Overall, although hot sectors continue to rotate, core leading stocks have maintained their strength, trending upward with fluctuations. These remain key sentiment anchors for identifying catch-up opportunities within sectors.

Market outlook

Today’s market initially jumped before pulling back, with mixed performances across the three major indices—the Shanghai Composite briefly reclaimed 3,500 points before retreating, while trading volume increased further from yesterday. Despite short-term concerns about volume-driven stagnation, the current rally has accumulated substantial profits, and intensified divergence is understandable without sufficient incremental funds. The 5-day moving average should be monitored as a key support level; until breached, the market structure remains one of fluctuating gains. From a futures perspective, the lack of sector continuity persists, with most sectors fading after intraday surges due to weak follow-through. This has resulted in broad but shallow market participation. Positively, recent feedback from consecutive limit-up stocks shows improvement, potentially reviving short-term speculative sentiment. Thus, pullbacks may offer opportunities for dip-buying in popular sectors.

Market News Highlights

1. MIIT: Opens Window for Reporting on Key Automakers' Compliance with Payment Term Commitments

The Ministry of Industry and Information Technology (MIIT) opened today (the 9th) an "online window for reporting issues related to key automakers' compliance with payment term commitments," to address concerns from small and medium-sized enterprises (SMEs) regarding key automakers' failure to adhere to payment cycle commitments and inadequate implementation of the "Regulation on Ensuring Payment to Small and Medium-sized Enterprises." The window primarily addresses four types of issues: (1) key automakers failing to comply with the 60-day payment term commitment, with payment terms specified in procurement contracts exceeding 60 days; (2) key automakers setting unreasonable start dates for payment terms, delaying the issuance of inspection or acceptance certificates without valid reasons, thereby extending payment terms, and using receipt of third-party payments as a condition for payment or paying in proportion to third-party payments; (3) key automakers forcing or indirectly forcing SMEs to accept non-cash payment methods such as commercial bills and electronic accounts receivable certificates; (4) other issues related to key automakers' inadequate implementation of the "Regulation on Ensuring Payment to Small and Medium-sized Enterprises."

2. National NEV Ownership in 2024 Increased More Than Fivefold Compared to the End of the 13th Five-Year Plan Period

Zhou Haibing, Deputy Director of the National Development and Reform Commission (NDRC), stated at the first press conference on "High-Quality Completion of the 14th Five-Year Plan" held by the State Council Information Office on July 9 that in 2024, the national ownership of new energy vehicles (NEVs) reached 31.4 million units, an increase of more than fivefold compared to the 4.92 million units at the end of the 13th Five-Year Plan period.