China A-Share Market: Mixed Close as Shanghai Index Rises for Fifth Consecutive Day, Reclaiming 3950 Points

China's A-share market delivered a mixed performance on Wednesday (10th), as the Shanghai Composite Index (SSEC) reclaimed the 3950-point threshold and posted its fifth consecutive daily gain, while the ChiNext Index declined. Investors are digesting the latest inflation data and searching for signals on China's policy outlook.

The Shanghai Composite closed up 0.67% at 3966.59 points, the Shenzhen Component Index (SZI) gained 0.04% to 14316.96 points, and the ChiNext Index fell 0.73% to 3537.21 points. Combined turnover on the Shanghai and Shenzhen markets reached 2.52 trillion yuan, down 141.3 billion yuan from the previous trading session.

On the upside, the non-ferrous metals sector led gains, with precious metals and tungsten mining stocks performing strongly. Huabo Mining and Zhaojin Gold hit the daily trading limit, while Xianglu Tungsten recorded its second limit-up in four trading days. Pharmaceutical stocks remained active, with Baihua Medicine posting its fifth consecutive daily limit-up, and Harbin Sanlian hitting the limit-up for the third time in five trading days. Other pharmaceutical stocks including Bidai Medicine, Haochen Medical, Berry Genomics, Dadongfang, and Meinian Health also closed limit-up. Power grid equipment stocks were active, with Zhongdian Xinlong, Jingquanhua, and Sanbian Technology all hitting the upper limit. AI application概念股 rallied during the session, with Shiji Information and Rongji Software closing limit-up. The film and entertainment sector strengthened collectively in the afternoon, with Ruyi Film and Beijing Culture ending limit-up. Defense and military stocks led the market throughout the day, with Changcheng Military Industry and Hongdu Aviation closing limit-up.

On the downside, the computing hardware supply chain pulled back. Communication and electronics stocks led the declines, with Lianchuang Optoelectronics and Wuhan Fugu falling by over 10% or hitting the lower limit. Keweite, Changyintong, Guangxun Technology, Tongyu Communications, and Xunjie Xing dropped more than 7%. Computer stocks also saw sharp losses, with Yingjianke and Langke Technology falling over 9%, and Hengyin Technology, Pinming Technology, and Kaiwang Technology down over 5%. Machinery and equipment stocks were weak, with Taijin Xinneng down over 8%, Yanmai Technology and Dongwei Technology down over 5%, and Jiangwu Equipment, Huaxingyuanchuang, and Lianxun Instruments down over 2%.

On the macro front, official data released on Sunday (9th) showed continued weak price pressures in China. July's Producer Price Index (PPI) slowed more than expected, hitting a three-month low, while the Consumer Price Index (CPI) also cooled. Nomura Securities expects Beijing to rely more on fiscal measures than monetary easing to stabilize growth, noting that China's resilient exports may reduce the need for large-scale monetary stimulus.

According to Wind data, 4,066 stocks rose across the Shanghai, Shenzhen, and Beijing exchanges, 1,386 declined, and 80 were unchanged. Data from Dazhihui VIP showed 138 stocks gained over 9% and 13 stocks fell over 9% across the three markets.

Huatai Securities noted that last week's A-share rebound was mild and volume expanded moderately, with risk appetite recovering at the margin. Oversold rebounds dominated trading, with small-cap stocks showing significantly stronger elasticity than large caps. The firm believes oversold rebounds still have room to play out, particularly in the ChiNext Index. The timing of the密集 mid-year earnings season in mid-to-late August will be a key window to test the sustainability of the rebound. In terms of allocation, the firm recommends balanced positioning anchored on mid-year results. While oversold rebounds in AI hardware remain playable, public fund positions have not been fully unwound, which may limit the rebound's magnitude—positions should be controlled. The firm's top pick is communication equipment; among other oversold sectors, investors should focus on energy metals and minor metals. Among July's relatively resilient sectors, non-bank financials and CXO leaders with reasonable valuations remain worth watching. Mid-term, outbound supply chains and essential consumer goods are entering a window for increased allocation. High-dividend core holdings should be retained, with a structural focus on banks and transportation.

China Galaxy Securities pointed out that the A-share market in August is shifting from 'expectation gaming' to 'reality verification,' centered on three key themes: earnings, policy, and external risks. First, earnings verification: mid-to-late August marks the peak of A-share mid-year earnings disclosures, and the market is expected to price stocks based on whether earnings meet expectations. Second, policy verification: the July Politburo meeting outlined economic work for the second half of the year, and the focus now shifts to the rollout and implementation of detailed policies. Third, external risk verification: the Federal Reserve's policy path remains a global market focal point. In the short term, structural market trends are expected to continue, with the three verification themes gradually becoming clearer. Strategically, investors should remain patient and balanced, using earnings certainty as their offensive weapon and defensive assets as their shield.

Zhejiang Securities recommended maintaining medium-term positions and waiting for the rebound to fully materialize, while participating in short-term dips during the 'one step back' phase of the 'two steps forward, one step back' market pattern—but cautioned against chasing rallies during the 'two steps forward' phase. In terms of sectors, the firm suggested that investors with a medium-term view should focus on first-tier sectors such as securities, innovative drugs, and Hang Seng Tech, as well as second-tier sectors like media, computing, and non-ferrous metals, viewing them as rebalancing options beyond technology stocks.