Recent periodic adjustments in the A-share market have drawn widespread attention from investors. According to CITIC SEC's Chief Strategist Bao Chengchao and Chief A-Share Strategist Qiu Xiang, this round of adjustments resembles a rebalancing of shareholding structures following gains rather than a reversal in economic fundamentals or industrial trends. They maintain that the A-share market retains resilience over the medium to long term and is expected to return to a pricing logic centered on fundamentals and industrial growth.

Bao Chengchao views the core driver of this adjustment not as a sustained liquidity contraction, but as the release of profit-taking pressure from previously popular sectors, following valuation increases and excessive concentration of capital.

Nevertheless, market absorption capacity remains robust. Qiu Xiang bases this assessment on three key dimensions:

First, incremental capital continues to increase, indicating no shortage of market absorption capacity. Recent inflows into stock ETFs have expanded further. On the afternoon of July 17th, trading volumes for ETFs tracking the CSI 300, ChiNext, and STAR 50 indices continued to rise, signaling strong willingness among investors to buy on dips. Additionally, recent announcements from China Reform Holdings and China Chengtong regarding increased holdings of Chinese equity assets, with China Reform having deployed over 50 billion yuan in relending and supporting funds and China Chengtong accumulating nearly 10 billion yuan in purchases, demonstrate that "national team" entry is providing substantial support to market levels.

Second, the core logic of industrial trends has not fundamentally changed. The global AI industry remains in a phase of continuous investment, with capital expenditures from overseas cloud providers maintaining an expansionary trend. The upcoming financial results and capital expenditure guidance from major North American cloud providers at month-end will serve as a crucial window for observing the sustainability of AI demand. Domestic AI-related supply chains are also progressing, with profitability in sectors like communications and electronics continuing to improve, sustaining high industrial prosperity. The recent World Artificial Intelligence Conference showcased the latest advancements in domestic large models, intelligent terminals, humanoid robots, and other fields, further highlighting the ongoing trend of innovation and development within the AI industry.

Third, fundamental market signals are gradually diversifying. Previously, market attention was highly concentrated on the technology sector, with insufficient focus on profit improvements and valuation recoveries in non-AI areas such as finance, innovative pharmaceuticals, new energy, non-ferrous metals, and chemicals. As capital disperses from a single main theme towards multiple directions, some undervalued sectors are regaining market attention, providing a degree of counterbalance to the index pressure from the technology sector's adjustment. The market is transitioning from being driven by a single theme towards more diversified pricing.

Bao Chengchao's comprehensive analysis suggests that in the short term, attention should be paid to the pace of high-position share digestion and the rhythm of capital sentiment recovery. Over the medium to long term, the A-share market still possesses strong resilience. Fundamentally, the trend of profit recovery among listed companies is gradually becoming apparent, with the proportion of positive interim report previews higher than the same period last year, indicating a continuous spread of profit signals. From a liquidity perspective, the trend of widespread household participation in the capital market continues, which is expected to provide long-term incremental support. Following this round of adjustments, market valuations and trading structures have further optimized, and high-quality assets with genuine earnings and reasonable valuations are expected to recover first.