June 5 Market Review: Initial Divergence Signals Coming Rotation

7

Tech Rebound Contrasts With Consumer Retreat as Market Enters Selective Phase

Chinese stocks advanced with the ChiNext Index leading gains (+1.17%), while individual stocks began showing divergence after recent broad-based rallies, signaling potential rotation among sectors as investors reassess positioning ahead of weekend policy expectations.

Key Market Movements

Sector	Performance	Key Drivers
Computing Power	Strong Rebound	Overseas AI stock momentum + earnings visibility (Shenghong Tech new high)
Consumer/Healthcare	Profit-taking	Fund rotation to tech after yesterday’s surge
Emerging Themes	Selective Strength	Sports (Jinling Sports), Nuclear (CNNC), Solid-state Batteries

Technical Landscape

• Index Trends:
  • SSE: Testing 3,400 resistance
  • ChiNext: 5-day MA support holding
• Market Breadth: 54% gainers vs 46% decliners
• Volume: Maintained above ¥1.2T threshold

Sector Rotation Analysis

1. Computing Power Resurgence

• CPO/PCB leaders: Shenghong Tech (new high), Shijia Photonics
• Previous favorites (DeepSeek-related) saw technical rebounds
• Virtual power plant crossover plays gaining traction

2. Consumer/Healthcare Pullback

• Profit-taking after yesterday’s surge
• Select stocks may see quick rebound (e.g., sports-related)
• Pharma watching Shutaishen, Zhongyida for stabilization

3. Rotational Themes

1. Nuclear: Policy anticipation plays
2. Solid-state Batteries: Similar to yesterday’s pattern
3. Rare Earths/Military: Geopolitical hedge

Trading Strategy Outlook

• Near-term: Expect increased divergence after 3-day rally
• Sector Approach:
  • Buy tech/innovation dips
  • Trim consumer rallies
• Positioning: Maintain balanced exposure across:
  1. Tech (computing/AI)
  2. Policy beneficiaries (nuclear/energy)
  3. Defensive (pharma selectives)

The market appears to be entering a phase where selective stock-picking will outperform broad sector bets, with particular attention to companies demonstrating:

• Clear earnings visibility
• Policy alignment
• Technical strength during pullbacks

Friday’s session may see increased volatility as traders position for potential weekend policy developments.

Related topics:

• Hsbc Will Inject 4 Billion Us Dollars into Its Private…
• Morgan Stanley: Under the Expectation of Slower Us Economic Growth,…
• The Pluvicto Drug from Novartis Showed in the Early Stages…