China A-Shares Surge Over 1%: CSI 300 Reclaims 3900, Weekly Gains for Third Consecutive Week

China's three major A-share indices rose over 1% on July 7, as the Shanghai Composite Index (SSEC) reclaimed the 3,900-point level, closing up for the fourth consecutive trading session. The index also posted a weekly gain of 2.81%, achieving three consecutive positive weeks.

The Shanghai index closed up 1.02% at 3,940.04 points, while the Shenzhen Component Index (SZI) gained 1.42% to close at 14,311.01 points. The ChiNext Index rose 1.35% to 3,563.12 points. Combined turnover on the Shanghai and Shenzhen stock exchanges reached RMB 2.66 trillion, an increase of RMB 135.6 billion from the previous trading day.

On the market front, pharmaceutical and healthcare stocks surged across the board, with Boteng Shares, Bid Pharm, and Nanmo Biology among multiple stocks hitting the 20% daily limit-up. CRO-related concepts saw a wave of limit-ups, including Yiqiao Shenzhou. CPO概念股 strengthened, with Vogt Optoelectronics achieving its fourth consecutive limit-up. The PCB sector continued its rally, with Jingwang Electronics and others hitting limit-up. Minor metal concepts were active, with China Rare Earth among those reaching limit-up. Precious metals rallied in the afternoon, alongside memory chips and electronic chemicals, leading the gainers.

On the downside, digital currency, gaming, coal, diversified finance, real estate, and coal stocks weakened. Home appliance stocks led the decline, with Cheyi Smart, Xingguang Limited, and Dema falling over 3%. Real estate stocks performed poorly, with Shenzhen Real Estate A, Dianzicheng, and Daming City dropping more than 3%. Bank stocks continued to fall, with Qingdao Rural Commercial Bank, Ruifeng Bank, Zijin Bank, Xiamen Bank, Lanzhou Bank, and Zhengzhou Bank all down over 1%.

According to Wind data, 2,853 stocks rose across the Shanghai, Shenzhen, and Beijing exchanges, while 2,530 declined, with 147 flat. According to Dazhihui VIP, 174 stocks across the three markets gained over 9%, while 10 stocks fell over 9%.

CITIC Securities stated that the market has further established a counter-logic toward upstream materials, with technology sectors forming a clear main theme. Combined with ongoing policy support for core components and key materials, market continuity is now more stable than before. Overall, investors should adopt a bullish strategy during pullbacks, holding long positions during corrections, following the principle of buying during sharp declines, avoiding chasing highs during volatility, and seizing the pace of market recovery and rebound in August.

China Merchants Securities believes the current strategy should focus on "investing primarily in oversold rebounds, supplemented by rebalancing allocations." Seasonally, A-shares in August have typically favored value stocks over the past decade, but growth stocks such as CSI 2000 and TMT have also performed strongly, showing robust phased potential. Historically, after significant A-share corrections, small-to-mid-cap growth indices like CSI 1000 and ChiNext tend to rebound more powerfully. Overall, A-shares remain in an upward cycle. After July’s sharp correction, extreme one-sided rebounds are unlikely to repeat. Sector and style rebalancing are driving demand, and the recovery of growth tracks deserves attention.

Galaxy Securities noted that structural rebounds along the technological innovation theme will continue for some time. Currently, the macro environment continues to improve slightly, with consumer and export-related indices steadily recovering and exchange rate conditions trending looser. The capital consensus on upgrading high-end manufacturing and AI industries remains unchanged. According to early-August market models, the market will return to being dominated by volatility and momentum, with top performers concentrated in tech-growth areas such as semiconductors and commercial aerospace.

Huang Hongwei, Chief Strategy Analyst at Caixin Securities, said the recent global adjustment in AI tech stocks was driven by valuation selling. Recent volatility in U.S. AI hardware stocks is actually “a positioning event, not the beginning of deteriorating AI fundamentals.” High leverage levels have amplified price swings, but leading companies have not slowed their pace in accelerating computing infrastructure, fully supporting the view that “de-rating, not de-risking” is underway. The market has likely seen short-to-medium-term lows, and there is a high probability of a volatile rebound in August. Lack of clear direction among market funds is currently the main reason for weak rebounds, meaning A-shares still need time to consolidate sideways.