Where to start
A weekly review of the A-share market shows a strong rebound, with the ChiNext board and small- and mid-cap stocks significantly outperforming the previously dominant value large-cap sector. The CSI 1000 index surged over 8% for the week, leading major broad-based indices, while the ChiNext and STAR boards also posted gains exceeding 6%. In contrast, the SSE 50 index rose only 1.28%, ranking it at the bottom among major benchmarks. Sector-wise, most Shenwan primary industries advanced, with electronics, non-ferrous metals, machinery and equipment, and telecommunications leading gains, while banking, food and beverage, home appliances, and non-bank financials lagged. In terms of market style, technology, cyclical, and consumer sectors rose, while stable and financial sectors weakened, with the technology sector rebounding sharply to gain over 9% in a single week.
Why core technology stocks may recover
Regarding investment strategy, as multiple external risks materialize and crowded positions in overheated sectors continue to clear, the technology sector has a foundation for recovery in August. After the Federal Reserve's July meeting and the completion of overseas cloud vendors' earnings reports, the period until the next Fed meeting in mid-September is a key window for deploying quality technology stocks in the second half of the year. However, a rapid short-term recovery in market sentiment remains challenging. Continued attention should be paid to market trading momentum; only if trading volume stabilizes above 2.5 trillion yuan can incremental buying be confirmed. In terms of allocation, the focus remains on computing power. While panic in July led to concerns that the AI cycle might be ending, this view has been largely disproven. Oversold core technology stocks are expected to see a recovery in valuation.
Risk considerations
Risks include: U.S. economic data repeatedly disrupting Fed rate cut expectations; domestic economic policy implementation falling short of expectations, leading to insufficient internal demand; escalation of U.S.-China trade friction; and heightened tensions in the Middle East.