A-share midday review | Three positive factors boost A-shares for a strong rebound! The ChiNext Index rose nearly 7%, with semiconductors and computing power hardware all rising across the board.

On July 21, the A-share market staged a deep "V" rebound in the morning! The three major indices hit bottom and collectively closed higher. By the midday close, the Shanghai Composite Index rose by 0.62%, the Shenzhen Component Index rose by 3.41%, and the ChiNext Index rose by 5.20%. In addition, the Sci-Tech 50 Index rose by 6.94%. Most individual stocks fell more than rose, with over 2800 individual stocks declining; the three major markets in Shanghai, Beijing, and Shenzhen traded 2 trillion yuan in the morning, with net outflows of 78.91 billion yuan from domestic main funds; the market's median rise and fall was -0.11%. On the market, the semiconductor equipment, storage chips, MLCC, power semiconductors, and advanced packaging segments of the semiconductor industry chain rebounded significantly. Stocks like NAURA Technology Group and Chongqing Genori Technology hit limit up. The optoelectronics chips, optical modules, PCB, and NVIDIA concepts in the computational hardware sector collectively strengthened, with stocks like Han's Laser Technology Industry Group and Shenzhen Sunlord Electronics hitting limit up. The zirconium oxide and computational metal concepts rose, with stocks like Shandong Sinocera Functional Material and Guangdong Orient Zirconic Ind Sci & Tech hitting limit up. In terms of declines, the old board sector once again trended downwards. Medical and pharmaceutical concepts like biomedicine, generic drugs, CRO, and traditional Chinese medicine all experienced a pullback. The oil concept and the oil and gas industry chain declined again; the pork and poultry concepts continued to fall; consumer concepts like medical aesthetics, dairy, food and beverage, white spirits, and retail all declined again; the real estate industry chain trended downwards again, with stocks like China Union and Yang Guang Co., Ltd. falling by over 7%; the major financial sectors like banks, insurance, and securities all trended downwards. In terms of news, three major positive factors helped the A-share market rebound: 1. The stock markets in Japan and South Korea rallied collectively, lifting the two major storage chip giants. 2. On July 20, trillion-level insurance institutions like The People's Insurance, China Life Insurance Group, Ping An Insurance, China Pacific Insurance, and New China Life Insurance collectively voiced their support for the development of the capital market and actively rewarded investors. 3. On July 20, many A-share listed companies disclosed their performance forecasts, performance reports, and semi-annual reports for the first half of 2026. Many of the companies that released mid-year performance-related information showed good profit levels, with several industries like shipping, semiconductors, chemicals, environmental protection, etc., seeing good prospects. Many companies achieved a doubling of net profits year-on-year. Among them, ZheJiangJiHua Group's performance report showed an increase of more than 12 times, and companies like Fujian Highton Development, Raytron Technology, Guangzhou Haozhi Industrial, and Han's Laser Technology Industry Group fully released their performance potential. Looking ahead, Huaxi believes that we may have passed the most intense selling pressure point, and the market may enter a new stage of "oscillation and slow recovery" with limited downside space for indices. Breaking through the upside also requires resonance cooperation from both fundamentals and funding. Popular sectors: 1. Semiconductor industry chain rebounds significantly Semiconductor equipment, storage chips, MLCC, power semiconductors, and advanced packaging segments of the semiconductor industry chain rebounded significantly, with stocks like NAURA Technology Group and Chongqing Genori Technology hitting limit up. Analysis: Chen Libai, chairman of WeiKang, stated that in the next ten years, one of the two most scarce resources in the world will be storage. Chen Libai expects storage prices to continue rising in the second half of the year. As long as product prices rise and there is sufficient supply for sale, there is no reason for related companies' profits to be downgraded, and profit opportunities in the second half of the year are expected to continue to increase. 2. Computational hardware sector strengthens collectively The computational hardware sector, including optoelectronics chips, optical modules, PCB, and NVIDIA concepts, strengthened collectively, with stocks like Han's Laser Technology Industry Group and Shenzhen Sunlord Electronics hitting limit up. Analysis: In terms of news, the computation field has received new catalysts. Kimi has temporarily suspended C-end new user subscriptions due to a shortage of computation, while Meta plans to lease computations to Anthropic with a contract limit of up to $10 billion. The Ministry of Industry and Information Technology has stated that it will issue guidelines for the construction of the computation standard system to promote the establishment of standards for computation service capacity assessment and market-based pricing for computation. 3. Computational metal concepts rise The computational metal concepts like zirconium oxide rose, with stocks like Shandong Sinocera Functional Material and Guangdong Orient Zirconic Ind Sci & Tech hitting limit up. Analysis: Shandong Sinocera Functional Material announced that the company has decided to raise the sales price of zirconium oxide powder starting from July 27, 2026, with an increase ranging from 10% to 40%. Institutional perspectives: Huaxi: The medium to long-term trend in technology is not over yet, and it is currently dominated by differentiation and rotation. Huaxi believes that we may have passed the most intense selling pressure point, and the market may enter a new stage of "oscillation and slow recovery" with limited downside space for indices. Breaking through the upside also requires resonance cooperation from both fundamentals and funding. On the one hand, the desensitization of A-share technology to foreign factors is a process. The deleveraging pace in the South Korean stock market still needs to see a continuous decline in forced liquidation scale. Additionally, foreign investors in South Korea have been selling Korean stocks significantly for four consecutive months. Before desensitizing the leveraged trading in the South Korean stock market, it may still impact global assets sentiment. On the other hand, with industrial trends driving the technology market, a ultra-consolidation rally like the first half of the year is difficult to achieve until a new round of strong industrial catalysts emerge, so rotation and differentiation will be the main theme. One is to select high-quality stocks supported by strong fundamentals, and the other is to rotate towards the domestic chain and downstream industries. In terms of industry allocation, focus on high-growth industries, especially in the upstream, midstream and downstream industries related to "AI+," select high-quality stocks with strong fundamental support; also pay attention to related high-quality targets like "innovative drugs, Hong Kong Internet, media and games". Caixin Securities: After experiencing a large adjustment, the market has strong rebound potential Caixin Securities believes that on Monday, the market stabilized after a significant adjustment, and a short-term rebound is expected. Recently, the volatility of major global equity markets has intensified. After experiencing a large adjustment, the A-share market has the potential for a strong rebound, but under the continued depression of the South Korean stock market, the market fluctuated widely throughout the day after opening high, and the three major indices eventually stabilized. On the market, hard technology divisions continue to be under pressure and have not shown clear signs of stabilization, while the heavyweights in cyclicals, consumption, and dividends remained stable. Overall, although the market is still in a weak oscillating trend, a short-term rebound may be imminent, and investors do not need to be overly pessimistic. On the one hand, the risks in the market have been somewhat released after continuous adjustments, panic selling has gradually subsided, and with some core stocks deeply adjusted, they are once again showing investment value, which is conducive to attracting incremental funds into the market; on the other hand, the China Securities Regulatory Commission and other institutions are making every effort to maintain the stable operation of the market, which is conducive to restoring investor confidence. However, until the hard technology sector no longer shows significant negative feedback, there is limited room for restoring confidence in funds, and the market rebound process may maintain a high degree of volatility. In the medium term, driven by factors such as the completion of the disclosure of mid-year reports by the end of August, and the approach of the midterm elections in early November in the United States, it is expected that from late August to the end of October, the A-share market indices may have a favorable window for another round of long positions, during which risk appetite and positions can be increased. EB Securities: Market watchful sentiment is hard to change, short-term may still be dominated by oscillations and structural rotation EB Securities believes that the current market is still in a game of stalemate. The watchful sentiment is still strong, which significantly restricts the rebound in the technology mainstream. Looking ahead, given the continuous escalation of the military confrontation between the United States and Iran, geopolitical factors repeatedly disturb global risk appetite. Combined with the fact that the overseas technology stock valuation adjustment pressure has not been fully released, and the previous technology track trapped pressure still exists, the market's watchful sentiment is hard to change. In the short term, it may still be dominated by oscillations and structural rotation.