Monday, June 22nd, presented a fascinating market session, with both established and emerging sectors advancing, helping to stabilize the indices.

The combined trading volume across the two major exchanges reached 3.7 trillion, indicating a significant surge in activity.

The leading gainers for the day were major financial institutions, non-ferrous metals, and chemical companies.

This shift may signal a market attempt to move away from an extreme concentration in technology stocks towards a more balanced portfolio allocation.

Let's examine the specific data.

What Sparked the Financial Sector Rally?

On June 22nd, the non-bank financial sector surged by 6.84%, with numerous insurance and brokerage firms hitting their daily limit-up.

A related ETF tracking brokerages saw a substantial gain of 7.37%, marking a strong rebound from the traditional financial sector.

Some analysts have suggested that investing in brokerages is essentially a bet on technology, bringing the focus full circle.

Returning to the main point, the core drivers behind the brokerage surge are primarily threefold.

First, the Lujiazui Forum released a comprehensive package of supportive policies, serving as the primary catalyst for the rally.

The favorable measures include expanding the fifth set of listing criteria for the STAR Market to the AI sector and supporting Hong Kong-listed companies in seeking A-share listings, directly opening new avenues for investment banking.

On the investment side, policies support the launch of active ETFs by the Shanghai and Shenzhen exchanges, initiate pilot programs for commercial real estate REITs, and encourage pension and insurance funds to increase equity investments, all of which broaden the scope for wealth and asset management services.

For the insurance sector, advancing revisions to the Insurance Law and enforcing stricter compliance are expected to benefit leading insurers by curbing disorderly competition and potentially improving the cost structure of liabilities.

Secondly, the brokerage sector's fundamentals are solid, yet valuations remain at historically low levels.

In the first quarter, listed brokerages collectively reported revenue of 151.1 billion yuan, a year-on-year increase of 31.4%, and net profit attributable to shareholders of 60.8 billion yuan, up 16.46%.

Similarly, the top five listed insurers reported a combined net profit of nearly 70 billion yuan for the quarter.

However, the current valuation of the brokerage sector is below the 98th percentile of its 10-year range, while the Price-to-Embedded Value ratio for insurers is also near historical lows.

This mismatch between strong performance and low valuation inherently provides momentum for a potential re-rating.

Thirdly, a rotation of funds from high-valuation to low-valuation sectors is underway.

Following new guidelines on thematic investment style management for mutual funds, expectations of a style correction are prompting capital to flow from crowded tech plays back into undervalued financial stocks like brokerages and insurers.

This is further supported by a post-holiday recovery in new account openings, with May seeing 2.77 million new A-share accounts, a 77.76% year-on-year increase, strengthening expectations for incremental capital entering the market.

The Surge in an AI Stock

Another focal point was the performance of the AI company, KNOWLEDGE ATLAS.

On Monday, June 22nd, its stock price surged over 40% intraday, bringing its year-to-date gain to over 1,900%, before paring some gains.

Nevertheless, its total market capitalization surpassed 1 trillion Hong Kong dollars.

Reasons Behind KNOWLEDGE ATLAS's Strength

Looking at the background, on June 15th, KNOWLEDGE ATLAS officially released and open-sourced its new flagship model, GLM-5.2.

Key parameters include a context window of up to 1 million tokens, maintaining performance on long-context tasks.

It was open-sourced under the MIT license, lowering the barrier for developer adoption and accelerating ecosystem development, which is expected to directly boost usage on its open platform and API services.

From a technological evolution perspective, GLM-5.2 represents a continuation of the company's strategy for rapid model iteration, with only four months between GLM-5 and GLM-5.2.

Following its release, GLM-5.2 generated significant buzz, scoring 1595 points on the large model benchmarking platform Arena.ai, ranking second overall and first among globally available models.

This impressive performance, coupled with U.S. export restrictions on competing models like Claude Fable 5, has allowed Chinese model providers to quickly fill the supply gap.

KNOWLEDGE ATLAS announced that GLM-5.2 would be available to all users of its GLM Coding Plan, directly capturing developer demand displaced by the restricted models.

On the commercial front, the CEO's previously proposed metric of Token Architecture Capability is materializing.

The open-source strategy and full availability of GLM-5.2 essentially trade superior "intelligent quality" for exponential growth in "call volume," leveraging economies of scale to reduce inference costs and ultimately enhance "economic conversion efficiency."

Consensus estimates project the company's revenue to reach 3.082 billion yuan in 2026, a 325.5% year-on-year increase, further growing to 7.708 billion yuan in 2027 and 16.991 billion yuan in 2028.

However, the current trillion-dollar market capitalization implies a price-to-sales ratio of 263 times for 2026.

Bridging the gap from a "good asset" to a "good price" requires sustained revenue growth exceeding expectations.

It is speculated that the current market pricing may not reflect the 2026 outlook but rather a 2030 scenario where the company becomes "China's AI infrastructure," akin to a Chinese version of OpenAI or Anthropic.

Any动摇 in this long-term assumption could trigger significant valuation adjustments.

Regarding indices, KNOWLEDGE ATLAS was recently included in several indices, including the Hang Seng Stock Connect China Information Technology Index, where it holds a weight of approximately 1.8%.

Other companies added to the index alongside it are also from popular sectors.

Among ETFs, the largest ETF tracking this particular index hit a new all-time high since listing, closing up 2.63% and ranking as the top-performing Hong Kong equity ETF year-to-date.

It appears that "hard technology" remains the key theme.

Key Events to Monitor This Week

Several important events are scheduled for this week that warrant attention.

Micron Technology's earnings report is one of the most anticipated events in global capital markets.

Analyst consensus estimates project adjusted earnings per share for Q3 to reach $20.57, representing a year-on-year increase of nearly 1000%.

The report will directly validate the strength of AI-driven demand for memory chips.

NVIDIA's annual shareholder meeting is also set for this week.

The focus will be on capacity planning for its next-generation AI chips (Blackwell and Vera architectures), progress in commercializing the AI ecosystem, and how the company plans to return its substantial cash flow to shareholders.

These factors are crucial for the sustainability narrative of AI infrastructure investment.

On the geopolitical front, positive signals emerged from U.S.-Iran negotiations.

The U.S. Vice President noted "significant progress" on opening the Strait of Hormuz and securing a ceasefire in Lebanon.

The Iranian Foreign Minister also stated that Iran received exemptions for oil exports and that some assets were unfrozen.

An easing of geopolitical tensions helps lower the global risk premium.

A bullish MACD golden cross signal has formed, indicating positive momentum for several stocks.