Market Overview

A-share indices ended mixed but higher on July 29, with the Shanghai Composite, Shenzhen Component, and ChiNext all posting gains. Among the Shenwan primary sectors, all advanced except for Electronics and Computers. Trading volume expanded compared to the previous session, with Media and Retail leading the gains. The technology and growth sectors are still digesting the risk of excessive overcrowding, and ongoing share rotation, combined with offshore headwinds, suggests short-term volatility will persist. However, notable signs of individual stocks outperforming the broader index have emerged recently. The market is gradually moving toward a more balanced recovery, as the rebalancing between tech/growth and low-valuation value sectors continues. On the fundamental side, the earnings cycle remains on a steady course of repair, with domestic market stabilization signals intensifying, liquidity pressures easing, and the secular trend for tech growth remaining intact. In the short term, a balanced allocation is recommended. Once the tech sub-sectors stabilize, positions can be built in areas with durable earnings visibility. Attention should be paid to the US Federal Reserve's interest rate decision tonight, where the market expects a roughly 60% chance of rates remaining unchanged. Also, focus on Kevin Warsh's explanation of the policy framework, as his narrative could influence markets more than the decision itself.

Key News Events

Ministry of Commerce Responds to US Section 301 Investigation on Capacity

On July 28, the Ministry of Commerce (MOFCOM) released a document titled "China's Position on the So-Called 'Overcapacity' Issue." At a State Council Information Office press conference, MOFCOM introduced the document and responded to the US's Section 301 investigation into capacity issues, calling it a typical act of unilateralism that severely undermines the international economic order. The MOFCOM stated that the US cannot narrowly define production exceeding domestic demand as "overcapacity," nor has the right to unilaterally determine whether trading partners have "overcapacity" through a Section 301 investigation and impose unilateral restrictive measures. China urges the US to correct its wrongdoings and return to resolving issues through dialogue and consultation. China will closely monitor the situation and reserves the right to take necessary measures. This Section 301 investigation extends the trade friction from tariffs to the capacity issue, suppressing market expectations for export-oriented sectors like new energy, steel, and chemicals. However, MOFCOM's clear stance and document help stabilize market confidence in China's industrial policies. In the short term, related export supply chains may face sentiment fluctuations, but China's manufacturing global competitive advantages will not be altered by unilateral investigations. Companies with core technology barriers exhibit relatively stronger risk resistance.

Central Cyberspace Affairs Commission Launches "AI Large Model IPv6 Capability Enhancement Special Action"

On July 28, at the 5th China IPv6 Innovation and Development Conference, the "AI Large Model IPv6 Capability Enhancement Special Action" was officially launched. This special action, jointly initiated by the Central Cyberspace Affairs Commission with the cyberspace offices of Beijing, Shanghai, Zhejiang, and Shenzhen, along with five leading large model companies, was launched in Xiong'an New Area. Lasting one year, the action aims to enhance the large-scale application capability of IPv6 for large models, drive traffic and user growth for large model applications via IPv6, promote the integrated innovation of large models and IPv6, and accelerate the evolution of the internet toward native intelligence. This action paves the way for AI large model applications from the network infrastructure level. The explosive growth in token traffic places new demands on network carrying capacity, with IPv6 becoming a key foundation due to its vast address space and efficient routing mechanisms. For A-shares, this policy benefits related network infrastructure, cloud computing infrastructure, and AI computing power network directions. It also provides fundamental support for the large-scale implementation of AI applications, contributing to the sustained improvement in the mid-to-long-term prosperity of the AI industry chain.

PBOC Releases Q2 Financial Institution Loan Investment Statistics Report

The People's Bank of China (PBOC) released the Q2 financial institution loan investment statistics report, showing that the balance of RMB loans from financial institutions grew by 5.2% year-on-year at the end of Q2, with continued optimization of the credit structure. The balance of domestic and foreign currency green loans grew by 14.5% year-on-year, the balance of RMB inclusive small and micro loans grew by 8.3% year-on-year, and the balance of domestic and foreign currency loans to technology-based SMEs reached 4.15 trillion yuan, with a loan access rate of 50.8%. The balance of real estate loans was 50.74 trillion yuan, down 4.9% year-on-year. The Q2 credit growth rate slowed from 5.7% in Q1 to 5.2%, reflecting a clear shift in growth pace, indicative of the financial sector mirroring the economic structural transformation. However, the structural optimization trend is prominent, with growth rates for green loans, inclusive small and micro loans, and loans to technology-based enterprises significantly outpacing the overall loan average. Real estate loans continued to contract, with funds accelerating towards new quality productive forces sectors. For A-shares, the change in credit structure is highly consistent with industrial policy direction. The medium-to-long-term financial support for sectors like green energy and technological innovation continues to strengthen.

Market Recap

On July 29, A-share three major indices ended higher. At the close, the Shanghai Composite Index stood at 3828.47 points, up 0.40%; the Shenzhen Component Index was at 13658.44 points, up 1.10%; the ChiNext Index was at 3378.70 points, up 1.55%; the STAR 100 Index was at 1698.78 points, down 0.01%. Among the Shenwan primary sectors, Media, Retail, and Social Services led the gains, rising 3.07%, 2.73%, and 2.41% respectively. Only Electronics and Computers declined, falling 1.13% and 0.12% respectively. A total of 4,033 stocks advanced, while 1,179 declined.

Fund Flow Tracking

Market turnover reached 2,311.967 billion yuan, an increase from the previous trading day. Margin trading balance closed at 2,669.110 billion yuan as of yesterday, down from the prior trading day. Data source: Flush, as of July 29, 2026. Investment involves risk. Fund management companies commit to managing fund assets with honesty, diligence, and responsibility, but do not guarantee profits or returns. Past performance is not indicative of future results.