Preface

The recent rally in China's A-share market is showing strong momentum, with key indices achieving new highs. Despite a decline in trading volume, significant gains have been observed in sectors such as consumer electronics, new energy vehicles, pharmaceuticals, and aerospace equipment. This article delves into the drivers behind these movements and what they signify for investors.

Lazy bag

The A-share market has surged, with consumer electronics and new energy vehicles leading the pack. Strategic shifts and policy supports could sustain this rally.

Main Body

The Chinese stock market has seen a substantial uptick as the Shanghai and Shenzhen indices, among others, hit new benchmarks. Trading volumes have tapered to 1.33 trillion yuan; however, the market's advance continues robustly, driven by activities in consumer electronics and pharmaceuticals. Stocks in sectors such as ocean economy and machinery have seen decreases, highlighting a rotational shift among investors.

Real-time data from Wind indicates a net inflow of over 215 billion yuan in the electronics industry alone. In parallel, the pharmaceutical sector has attracted more than 74 billion yuan, underscoring investor confidence in innovative drugs and related biotechnologies.

Investment firms like Central China Securities suggest a greater interest from long-term funds entering the market, supported by a steady growth in ETF scale and insurance fund inflows. These elements are creating a noticeable safety net for the market, maintaining stability amidst global economic fluctuations. Central China Securities also recommends a balanced strategy focusing on strong half-year performance stocks with reasonable valuations.

Dongxing Securities is optimistic about a prolonged market rally, especially after surpassing the 3400-point mark, which it considers a new journey's outset. This firm also observes healthy shifts in market hot spots, particularly within the industrial sectors of defense and solid-state batteries. Projections indicate that July is likely to sustain an upward trend.

The pharmaceutical sector, spotlighted by the ascent of innovative drug stocks, has witnessed significant developments. Reports from YaoTongShe indicate that the National Medical Products Administration (NMPA) approved 41 new Class 1 innovative drugs in the first half, including biomedicine and traditional medicine. This development reflects the sector's burgeoning potential and aligns with recent policies promoting high-quality innovative drug progression.

Sales data further supports the market's dynamism in new energy vehicles (NEVs). Leading the charge, BYD's records show a 19.9% increase in June sales compared to the previous year, with first-half sales over 214 million units, marking a 33.04% increase. Furthermore, companies like Leap Motor and Xpeng have showcased remarkable uptrends in their deliveries, well over 100% monthly year-over-year growth, emphasizing sustained demand in NEVs.

Guoxin Securities identifies solid-state batteries as a critical factor in shaping future automotive landscapes, advocating focus on leading firms actively engaging in this technological advance. Such insights align with the competitive push for more secure and long-lasting batteries in electric vehicles.

Key Insights Table