Table of Contents

• You might want to know


• Main Topic


• Key Insights Table


• Afterwards...

You might want to know

• Will AI and robotics continue to lead sector rotation in A‑shares, or will defensive and dividend‑oriented stocks regain dominance in August?

• How should investors position portfolios amid a potential transition from broad tech-led gains to performance-based sector selection?

Main Topic

July’s A‑share trading month concluded with a volatile finish and a notable rebound driven by technology-related names. On July 31, a collective uptick in tech stocks helped Shanghai and Shenzhen markets recover from recent weakness. By the close, the SSE Composite Index sat at 3,832.26 points, rising 0.72%, the SZSE Component Index rose 2.21% to 13,578.93, the ChiNext Index gained 3.06% to 3,343.96, and the STAR Market Composite advanced 3.69% to 1,819.90. Turnover across Shanghai, Shenzhen and Beijing reached RMB 25,599 billion, expanding by about RMB 2,015 billion from the previous trading day.

Across the broader market, nearly 4,700 stocks finished higher that day, led by themes such as multimodal AI, PCB manufacturers, and humanoid robotics. However, looking at the full month, the aggregate picture was one of divergence: dividend‑oriented and cyclical sectors outperformed while some technology subsectors that previously ran hard experienced pullbacks. Among the 31 first‑level industries tracked by Shenwan, coal topped the monthly leaderboard with a gain of 14.29%. Other notable monthly winners included oil and petrochemicals, banks, food & beverage, beauty & personal care, agriculture & fisheries, transportation, retail, household appliances, and pharmaceuticals & biotechnology. In contrast, earlier high‑fliers such as electronics and communications saw consolidation.

One of July’s clearest thematic strengths was the renewed momentum in AI application plays. In the final session, a raft of AI‑adjacent names rallied significantly, with multiple stocks hitting the daily 20% limit. Drivers included product and model announcements: one firm released a new generation multimodal model capable of unified understanding across text, image, video and audio, supporting native stereo audio in generated audiovisual outputs and 2K direct rendering for clips up to 15 seconds. Separately, a domestic AI company open‑sourced a flagship large model whose parameter scale reaches an industry‑leading magnitude, potentially accelerating commercialization at the application end.

Broker research highlighted that as AI moves toward large‑scale inference and vertical deployment, upstream and supporting infrastructure—homegrown compute platforms, intelligent orchestration, distributed storage and advanced cooling solutions like liquid cooling—stand to benefit. From a medium‑ to long‑term perspective, analysts recommended focusing on two investment threads: the AI industry chain itself and the broader data economy.

Another bright spot was the resurgence of humanoid robotics sentiment. Several robotics and component names closed at upper price limits as investors reacted to supply and listing developments. Notably, a robotics company advanced through IPO processes with planned pricing and subscription dates, drawing attention to the sector’s near‑term funding and growth pathway.

Analyst commentary emphasized that the humanoid robot industry is entering a transition from technological breakthroughs to early stages of scaled commercialization. Supply constraints are gradually easing as manufacturers such as established EV and robotics firms push toward production, while rising labor costs and automation demand provide a secular demand underpin. Policy support plus investor capital and breakthroughs in AI models—injecting decisioning and autonomy into robots—mean the segment could evolve into a standalone industry that moves beyond business (B2B) applications into consumer (B2C) scenarios over time.

From an investment strategy perspective, research houses argued 2026 may be a critical window for validating mass production and real‑world use cases. They suggested concentrating on (1) component suppliers with positions in high‑value, technically demanding parts—precision reducers, actuators and sensors—and (2) domestic supply chain players that can materially lower unit costs while maintaining quality for volume production, such as motor, reducer and controller manufacturers capable of scalable, cost‑effective output.

Looking toward August, market strategists generally expect the focus to shift toward dual validation from policy signals and corporate earnings. One chief strategist argued that July’s concentrated panic has largely dissipated, prompting a gradual flow of funds from concentrated AI bets into more defensive or dividend‑oriented areas. He forecast a mild upward trend punctuated by volatility, with AI‑related segments remaining contested after recent corrections; differentiation is likely to persist in the near term. The recommended approach was a barbell (dumbbell) allocation: keep conviction in long‑horizon tech/AI themes while selectively rotating into higher‑yield, more defensive names with earnings clarity.

Other strategy teams were more sanguine about tech’s staying power. They contended that a large‑scale style switch away from growth is unlikely given three foundations: (1) persistent structural divergence across the economy, with AI‑related investment, production and exports still in expansion; (2) policy emphasis on innovation that effectively underwrites long‑term incentives for tech; and (3) an acceleration of homegrown hard‑tech IPO activity that continues to release industrial and capital market tailwinds. In this view, tech remains the market’s principal narrative, and increasing index weight for tech‑heavy segments could give the space additional support as indices stabilize.

In terms of allocation, strategists advised seeking structural opportunities within tech volatility while also allocating to non‑tech pockets with clear thematic or export strength. For technology, they favored selectively buying into segments such as semiconductor equipment—expected to benefit from industry capex expansion—and storage names that show high earnings visibility. Outside of tech, sectors tied to resilient overseas demand such as certain chemicals and power equipment may offer attractive risk‑reward. Thematic catalysts were also highlighted in agriculture & fisheries, while improvements in non‑bank financials’ share structures could create trading opportunities as market conditions normalize.

Overall, July closed with an undercurrent of rebalancing—dividends and cyclicals performed well as some high‑growth tech names consolidated. August may test whether that rotation is transient or the start of a broader style adjustment. Investors are advised to weigh both the secular technology story and near‑term earnings and policy signals when constructing portfolios, focusing on companies with demonstrable profitability, strong visibility into results, and durable competitive advantages.

Key Insights Table

Afterwards...

Looking forward, the interplay between policy signals, corporate earnings, and renewed capital flows will determine whether the recent tilt toward dividend and cyclical themes endures or whether technology and innovation regain dominance. Market participants should monitor production milestones in robotics and commercialization steps for AI applications, as these developments will influence both sentiment and fundamentals. Risk management and selective stock selection—favoring companies with clear earnings visibility and scalable competitive advantages—remain prudent as style rotation and sector leadership continue to evolve.