This week, the A-share market experienced a period of consolidation, with major broad-based indices showing divergent performance. The CSI All-Share Index edged up 0.27%, while the ChiNext Index, CSI 1000, and Shenzhen Component Index recorded gains. In contrast, the Beijing Stock Exchange 50 Index fell by more than 4%.
In terms of style, small-cap stocks outperformed this week. Consumer and growth-oriented styles rebounded amidst volatility, while cyclical sectors led the declines, and financial and defensive sectors also posted losses. At the industry level, sector performance was mixed, with pronounced rotation. The top-performing sectors were conglomerates, telecommunications, and pharmaceutical and biological, while non-ferrous metals, beauty and personal care, and non-bank financials saw the steepest drops.
Market trading activity saw a slight decline. The average daily turnover for the week was 2.3532 trillion yuan, a decrease of 76.855 billion yuan from the previous week. The average daily turnover rate was 1.6486%, down 0.07 percentage points week-on-week. As of Thursday, margin balance (including securities lending) stood at 2.675715 trillion yuan, an increase of 28.172 billion yuan from the prior week. From August 6 to 12, global funds registered a net outflow of 6.792 billion US dollars from A-shares (compared to 988 million US dollars previously), with overseas funds net outflowing 367 million US dollars (compared to 243 million US dollars previously).
The PE (TTM) valuation of the CSI All-Share Index rose 2.08% week-on-week to 23.18 times, placing it at the 92.29th percentile since 2010. The PB (LF) valuation rose 2.7% to 1.89 times, at the 53.31st percentile since 2010. The yield spread between A-shares and bonds was 2.6173%, near 1.14 standard deviations below the three-year rolling average (3.2686%), and at the 47.34th percentile since 2010.
Where to Begin
External constraints have shown signs of marginal easing, providing fundamental support for the market's volatile recovery. However, amidst capital jostling and divergent views, the market's trajectory will continue to be accompanied by fluctuations and reversals, with sector rotation and structural divergence likely to persist. Three core factors are continually influencing market pricing and the pace of trends.
The first factor is the trajectory of crude oil prices amid repeated geopolitical conflicts. The ongoing geopolitical tug-of-war persistently disrupts global commodity markets, with oil price volatility serving as a key external variable affecting global risk appetite and inflation expectations. In the near term, the US-Iran conflict remains in a state of repeated friction and negotiation, with control over the Strait of Hormuz and its navigation rules being the focal point. Energy supply risks are unlikely to be fully resolved, and oil prices are expected to trade in a range.
The second factor is the marginal shift in expectations for the Federal Reserve's monetary policy. With US July employment and inflation data now released, concerns about a rebound in inflation have eased, and labor market resilience has somewhat declined. Market expectations for the Fed to tighten policy have marginally cooled. Attention should be paid to the policy signals from the Fed's meeting minutes and the late-month Jackson Hole global central bank symposium.
The third factor is domestic policy expectations and the pace of implementation. Subsequent signals for growth stabilization and the realization of physical workload from engineering projects are expected to drive the diffusion of structural market themes from specific sectors to a broader range. The focus is on the construction of the "Six Networks" of major infrastructure. As a policy lever that balances short-term growth stabilization with the long-term cultivation of new productive forces, the implementation of these projects is expected to directly boost orders in the upstream and downstream industrial chains, providing a key driver for earnings improvements in related companies.
Looking ahead to next week, several events are worth monitoring. First, the release of July domestic economic data, where the market will focus on verifying the total volume and structural characteristics of domestic demand recovery, and investor expectations for policy stimulus in the second half of the year. The August LPR quotes are scheduled for next Thursday. Second, catalysts in the humanoid robotics supply chain, including the opening of the 2026 World Robot Conference in Beijing Yizhuang next Wednesday and the IPO process of Unitree Technology. Third, the earnings releases of companies like Xiaomi, Baidu, and Kuaishou, which will serve to verify the consumer electronics cycle and the progress of AI commercialization.
Investment Opportunities
Opportunity One: Focus on the rotation and diffusion of growth themes. Recommended areas include chips, semiconductor equipment and materials, components, as well as emerging growth directions like humanoid robots, commercial aerospace, energy storage/power support, and innovative drugs.
Opportunity Two: The "Six Networks" initiative for coordinated development of new and old infrastructure, with rising expectations for policy implementation. Recommended sectors include electric power, computing power, communication equipment, water conservancy, building materials, and steel.
Opportunity Three: Build a defensive core position with high certainty for the medium to long term. Focus on sectors like finance, public utilities, and coal.
Opportunity Four: Capitalize on valuation recovery in pro-cyclical resource sectors. Pay attention to non-ferrous metals and basic chemicals.
Risk Warning
Risks include external uncertainties, policies falling short of expectations, unstable market sentiment, and ongoing liquidity adjustment risks.