This week, the major A-share broad-based indices experienced more declines than gains.

Looking at the primary broad indices, most of them closed lower for the week, with only the STAR 50 and CSI 500 indices posting gains. The other indices ended in negative territory, with the Shanghai Composite Index, the CSI 300, and the Wind All-A Index leading the declines. In terms of market style, most style indices closed down this week. Mid-cap growth stocks led the gains, while large-cap growth stocks were among the biggest decliners. Sector-wise, most primary Shenwan industries closed lower. Only building materials, electronics, non-bank financials, and basic chemicals saw increases, while all other sectors declined, with non-ferrous metals, automobiles, personal and household products, and steel posting the most significant drops.

A Look Back at This Week's Key Events

On the policy front, the "Action Plan for Stabilizing and Improving Foreign Investment Utilization," jointly issued by the Ministry of Commerce and two other departments, was made public on June 22. The plan outlines 15 measures across five areas: expanding market access, enhancing the convenience of foreign investment, improving investment promotion, establishing a robust service and guarantee system for foreign investment, and optimizing foreign investment management. On June 25, the National Development and Reform Commission and the National Energy Administration publicly released the "15th Five-Year Plan for the Construction of a New Energy System," which proposes the initial establishment of a clean, low-carbon, safe, and efficient new energy system by 2030. Additionally, six departments, including the Ministry of Ecology and Environment, the Publicity Department of the CPC Central Committee, and the Central Social Work Department, recently jointly issued the "Public Action Promotion Plan for Building a Beautiful China (2026-2030)."

On the industrial front, according to calculations by the Data Center of the Ministry of Culture and Tourism, during the three-day Dragon Boat Festival holiday in 2026, the number of domestic tourist trips nationwide reached 124 million, a year-on-year increase of 4.4%. Based on an operational analysis report of the domestic mobile phone market released by the China Academy of Information and Communications Technology on June 24, domestic mobile phone shipments in May 2026 reached 27.639 million units, up 16.5% year-on-year. Data released by the National Energy Administration on June 25 shows that as of the end of May, China's cumulative installed power generation capacity reached 40.1 billion kilowatts, ranking first globally. Overseas, according to a report by China National Radio's "News and Newspaper Digest," US Secretary of State Rubio stated on June 24 that technical negotiations between the United States and Iran will resume by the end of this month, likely to be held in Switzerland. On June 25, the Council of the European Union formally approved the implementation of the tariff commitments outlined in the "EU-US Joint Statement." The EU-US trade agreement will eliminate the remaining EU import tariffs on US industrial products and provide preferential market access for certain US seafood and non-sensitive agricultural products through tariff-rate quotas and tariff reductions.

Navigating Market Fluctuations for Optimal Positioning

A-share markets exhibited notable volatility this week, influenced by several key factors: 1) Intensified fluctuations in overseas markets, which created some disturbance for A-shares; 2) The rise in the US May PCE data, sparking market concerns about a potential Federal Reserve rate hike in September; 3) Lingering uncertainties surrounding the restoration of shipping order in the Strait of Hormuz and the subsequent implementation of the US-Iran agreement; and 4) Trading-level factors such as margin financing and quantitative trading, which further amplified market swings during the volatile period.

Looking ahead, the market may continue to experience volatility in the short term. However, from a medium- to long-term perspective, supported by both fundamentals and industrial trends, there is potential for a gradual upward trend amidst the fluctuations. In terms of allocation strategy, focus is advised on three high-growth themes represented by hard technology. Over the medium to long term, high-growth sectors remain the core of portfolio allocation, but we believe this is not limited to the technology sector. Beyond technology, fundamentals in the export chain and resource-related sectors are expected to continue improving, making them worthy of close attention in the future. Within hard technology, focus on industries such as electronics, communications, and defense. For the export chain, sectors like power equipment, machinery, and light manufacturing are key. Regarding upstream resources, attention should be paid to industries including non-ferrous metals, coal, petrochemicals, and basic chemicals.

Key Risk Factors to Consider

The primary risks include: 1) Policy implementation progressing slower than anticipated; 2) A significant decline in market sentiment; 3) Economic growth falling substantially short of expectations; 4) A severe deterioration in China-US relations; and 5) A continued escalation of tensions in the Middle East.