A-share market closing review | Three negative factors disturbed the market, Shanghai Composite Index fell below 3800 points, more than two hundred stocks hit the daily limit down, Shuangchuang index fell more than 7%

On July 17, A-shares fell under oscillation, with the three major indexes closing down. The Shanghai Composite Index fell below 3800 points, hitting a new low since September 2025. Over 5000 stocks in the market were in the red, with a total turnover of 2.7 trillion yuan for the day, an increase of 251.39 billion yuan from the previous trading day. At the close, the Shanghai Composite Index was down by 3.05%, the Shenzhen Component Index was down by 5.4%, and the ChiNext Index was down by 7.15%. Market analysis believes that the following three factors had a significant impact on the market on the day: 1. Weakness in overseas technology stocks overnight created disturbances in the A-share technology sector sentiment. The Nasdaq fell, leading to a general pullback in semiconductor and AI-related stocks, suppressing risk appetite in domestic electronics, communications, and computing power sectors. 2. The crowded trading in popular technology sectors in the previous period led to ongoing pressure from profit-taking funds. Recently, high-level sectors such as semiconductors, storage, and advanced packaging have been continuously adjusting, with market funds switching from high-level themes to low-level and defensive sectors. 3. After continuous adjustments, market confidence became more cautious, with a lack of short-term funding. The Shanghai Composite lost 3900 points the previous trading day, the ChiNext Index fell by almost 3%, and the Sci-Tech 50 Index fell by over 4%, with the weak inertia affecting the market on the day. At the same time, market volume contracted, intensifying the game of existing funds. The trading volume of A-shares on the previous trading day dropped to around 2.4 trillion yuan, with a lack of willingness for new funds to enter, making it easier to amplify sector rotation and index fluctuations. Additionally, it is worth noting that during the sharp decline, several broad-based ETFs saw significant increases in trading volume intraday. The ETF for the ChiNext board managed by E Fund (159915) had a trading volume exceeding 7.8 billion yuan, surpassing the total trading volume of the previous day. Other ETFs such as the Science and Technology 50 ETF managed by Huaxia Fund (588000), the Huatai Bairui managed Shanghai and Shenzhen 300 ETF (510300), the Southern managed Shanghai and Shenzhen 1000 ETF (512100), the Huatai Bairui managed A500 ETF (563360), and the Southern managed A500 ETF (159352) all had trading volumes exceeding 3 billion yuan, approaching the total levels from the previous day. In terms of market performance, the market hotspots were quite chaotic, with the power sector counteracting the trend. Guangxi Guiguan Electric Power, Shenzhen Nanshan Power, Leshan Electric Power, and DaTang HuaYin Electric Power all hit their daily limit highs. Meanwhile, the major financial sector saw a dynamic rise, with Xiangcai Co., Ltd. hitting its daily limit high, and China Construction Bank Corporation rising by over 3%. The hardware concept side showed active performance, with Zhejiang Meorient Commerce & Exhibition Inc.20cm hitting its limit high. On the downside, the pharmaceutical sector collectively adjusted, with Joinn Laboratories, Lionco Pharmaceutical Group, and Xinjiang Bai Hua Cun Pharma Tech all hitting their daily limit downs. The computing power hardware sector fluctuated downward, with Shenzhen Techwinsemi Technology hitting its third consecutive limit down, and Suzhou Everbright Photonics, Cig Shanghai, and Accelink Technologies all hitting their limit downs. Looking ahead, GF SEC believes that the corrective process for high-level technology trends is not yet complete, and full market sentiment stabilization will take time. Hot Sectors: 1. Power Sector Surging The power sector surged, with DaTang HuaYin Electric Power hitting its limit high, and Leshan Electric Power, Shenzhen Nanshan Power, Hangzhou Cogeneration Group, and Sichuan Xichang Electric Power following suit. Analysis: The State Energy Administration released data on national electricity consumption in June. In June, national electricity consumption was 898.1 billion kilowatt-hours, a year-on-year increase of 3.7%. The electricity consumption of the tertiary industry was 186 billion kilowatt-hours, with a year-on-year increase of 5.6%; among them, the electricity consumption of charging and swapping services and Internet data services was 14.8 billion and 9.1 billion kilowatt-hours, respectively, with growth rates reaching 57.1% and 41.4%. 2. Banking Sector Rising The banking sector rose against the trend, with BQD leading the way, and Bank Of Lanzhou, Chongqing Rural Commercial Bank, and Zhejiang Shaoxing RuiFeng Rural Commercial Bank following suit. Analysis: Zhongtai believes that the certainty of full-year bank performance will bring stable returns to bank stocks in 2026, which is short-term and market style-related, and the continuous development model (strong policy determination), strong corporate business, and residents' continuous low-risk preference will drive interest rate spreads to bottom out and revenue growth to continue, highlighting strong performance certainty. Institutional Views: GF SEC: The corrective process for high-level technology trends is not yet complete, and full market sentiment stabilization will take time. GF SEC believes that this round of adjustment is a concentrated release of internal and external disturbances: on the external front, the storage sector of US stocks continued to adjust overnight, compounded by an unexpected interest rate hike by the Bank of Korea leading to a single-day crash of over 7% in the South Korean stock market, with the Korean storage leader plummeting significantly, directly impacting A-shares. Internally, the first half of the year's performance verification period showed that some targets' growth rates were lower than expected, concentrated profit-taking funds triggered a chain reaction, further amplifying the scale of adjustments in high-level sectors. In the short term, the corrective process for high-level technology trends is not yet complete, and full market sentiment stabilization will take time. However, the short-selling momentum after continuous adjustments is quickly releasing, combined with the approaching World Artificial Intelligence Conference, the market sentiment is expected to see a recovery window in the middle to late months. Founder: It is highly probable for the market to stabilize later on and continue a structural bull market, and it is recommended to focus on individual stocks rather than indexes for operations. Founder believes that the A-share market's own adjustment requirements, combined with the global decline in technology, led to market declines. The adjustment process is also a process of risk release, with some high-growth and reasonably valued technology stocks releasing short-selling momentum in this round of adjustment, which could become target of capital inflows once global markets stabilize. Despite the ongoing market correction, it is highly probable for the market to stabilize later on and continue a structural bull market. It is recommended to focus on individual stocks rather than indexes for operations and to seize opportunities with certainty. Orient: A-shares have shifted their style to balance funding and performance-driven, and the sustainability of the shift should be noted in the future. Orient believes that A-shares have visibly undergone a reversal in style, with marked differentiation in different sectors. The technology sector, which was highly sought after in the first half of the year, continued to decline, while the "old stalwart" sectors that were continuously drained of funds in the first half performed strongly. Previously, driven by the grand narrative of AI computing power and large capital expenditures from technology giants, the technology sector represented by electronics and communications was thriving. However, under the influences of high valuations, performance realization, and intense volatility in overseas markets, these sectors suffered severe funding trampling. On the other hand, the market was quietly recovering, with industries previously neglected or even continually declining seeing fund inflows. Among them, the pharmaceutical and biological industry led the rally, as A-shares shifted their style to balance funding and performance-driven, and it is important to watch the sustainability of this shift, focusing on defense and short-term trading strategies. From a technical analysis perspective, the Shanghai Composite piercing the support level around 3900, a level that is also the lifeline since the September 24th market, could lead to a return to the top of the top-bound range of the past ten years, indicating a failure in the market trends of the last two years. Therefore, the probability of the aforementioned analysis is low. In terms of allocation, the future market trends after this adjustment are still dominated by technology. This article was reprinted from "Tencent Stocks," edited by Chen Siyu, GMTEight.