After over a month of adjustment, both the Shanghai and Shenzhen stock markets have witnessed a continuous upward movement. The Shanghai Composite Index once breached the 3,400 – point mark. Sectors such as humanoid robots (16.590, 0.11, 0.67%), artificial intelligence (AI), and healthcare have performed outstandingly, leading the market rally.
The fourth technological revolution is considered to be the AI revolution, which is expected to bring a series of investment opportunities. Humanoid robots are seen as the best implementation scenario for the combination of AI and consumption. After a significant increase in the first quarter of this year, there was profit – taking in the second quarter, but now it is anticipated to regain its upward momentum. Other sub – sectors of AI, including the Apple supply chain and the Nvidia supply chain, have also been on a continuous upward trend recently. These technology sectors have remained active and are expected to maintain their vitality throughout the year. Technology stocks are likely to continue leading the market rally in the second half of the year.
This year’s market trend has resembled a “sickle” shape. On one hand, the technology sector, representing the direction of economic transformation, has experienced a substantial increase, offering lucrative profit – making opportunities and attracting numerous investors. On the other hand, large – scale funds tend to allocate capital to low – valued and high – dividend sectors such as banks and power companies, which have performed well, with bank stocks reaching new highs repeatedly. In contrast, other sectors have shown relatively sluggish trends. It is predicted that there will be certain rotations in the market trend in the second half of the year, providing opportunities for each sector to perform.
Consumption and Pharmaceutical Sectors’ Situations
Affected by recent policy changes and the slowdown in the growth rate of residents’ consumption, the wholesale price of Feitian Moutai has fallen below the 2,000 – yuan mark, resulting in a relatively sluggish performance of the liquor sector. Facing declining terminal demand, some Moutai liquor in social inventory has been sold off. Breaking through the 2,000 – yuan integer barrier also has a psychological impact, affecting the demand for liquor and increasing the sell – off of social inventory. However, enterprises will adjust their shipment volumes according to changes in social sales prices to maintain a certain price level.
The overall performance of the consumption sector this year has been less than satisfactory, which is related to the decline in residents’ income. Nevertheless, new consumption fields, especially brands favored by young people like Pop Mart, Meixue Bingcheng, and Bao’ou Cha Ji, are showing vigorous development. This reflects changes in China’s consumption habits and investment opportunities in the new consumption field to some extent. However, the significant increase in the new consumption field may also lead to certain valuation bubbles, and investors need to be aware of the associated risks. From an investment perspective, traditional consumption stocks such as branded liquor and traditional Chinese medicine brands have seen a decline in valuation while the dividend rate has continued to rise, which may attract investors seeking medium – to long – term investment returns. In the long run, investment in enterprises ultimately depends on whether the company can achieve performance growth to bring stable long – term returns to investors.
The pharmaceutical sector has maintained a strong performance recently and has gradually formed an upward trend. Innovative drug stocks, in particular, have performed extremely well. On one hand, favorable policies have promoted the development of innovative medicine. On the other hand, according to the annual reports of innovative drug enterprises, the entire sector has gradually overcome the impact of centralized procurement, with profits recovering, thus presenting better investment opportunities. Additionally, the empowerment of AI in healthcare has led to the rise of the AI healthcare sub – sector, driving the outstanding performance of the entire healthcare sector. With the continuous increase in China’s aging population, the demand for medicine from the elderly is bound to grow, and the pharmaceutical sector is a key beneficiary. Some pharmaceutical stocks with core R & D capabilities and brand value deserve attention.
Economic Data and Policy Outlook
Data released by the National Bureau of Statistics on June 9th showed that in May, the Consumer Price Index (CPI) decreased by 0.1% year – on – year, the same as in March and April. The core CPI, which excludes food and energy prices, rose by 0.6% year – on – year, with the growth rate expanding by 0.1 percentage points compared to April. This year’s “Government Work Report” set the annual GDP growth target at 5% and the CPI target at 2%. However, with the current 0.1% year – on – year negative growth in CPI, more proactive fiscal policies and moderately loose monetary policies are needed to boost demand and drive prices to rise moderately. Boosting prices is also an important goal set by the central government, indicating that more growth – stimulating policies may be successively introduced, and the scope of the “trade – in for new goods” catalogue will likely be expanded to steer the economy towards a steady recovery.
Data from the General Administration of Customs on June 9th showed that in the first five months of this year, China’s total value of goods trade imports and exports reached 17.94 trillion yuan, with a year – on – year growth of 2.5%, 0.1 percentage points higher than that of the previous four months. Although the growth rate of exports slightly declined in May, it still achieved a 6.3% increase. Looking ahead, policies to stabilize foreign trade will continue to be implemented to promote the improvement and upgrading of imports and exports. In the complex international environment, China’s foreign trade has shown strong resilience in the first five months and achieved year – on – year growth. The relatively high growth rate of exports to Africa is a notable highlight. Currently, China – US trade negotiations are ongoing, and it is hoped that trade disputes can be resolved through negotiations as soon as possible and an agreement reached to promote the normalization of China – US trade, which is beneficial to the economic growth of both countries and global trade growth.
China’s Asset Revaluation and Inflow of Foreign Capital
China’s asset revaluation is in progress, and global capital is turning its attention to the East. From quantitative private equity to sovereign funds, foreign investment banks are focusing on the Chinese market and actively purchasing Chinese assets. International investment banks such as Morgan Stanley and Deutsche Bank have successively raised their expectations for China’s economic growth. Against the backdrop of China’s continuous implementation of monetary and fiscal policies, the resilience of the service sector, and technological breakthroughs driving asset value revaluation, foreign capital is accelerating its inflow into Chinese assets such as A – shares and Hong Kong stocks.
A series of economic stability policies have driven China’s economic recovery and the rebound of the capital market. Especially, the rise of the technology asset revaluation wave has attracted global capital. International capital is flowing into the Chinese market with unprecedented enthusiasm, and foreign institutions are also accelerating their research on A – share listed companies and actively exploring investment opportunities. The influx of global capital reflects a significant increase in the attractiveness of the Chinese market. The emergence of Deepseek has prompted global capital to reevaluate the potential and value of China’s technology assets. China has achieved resonance in artificial intelligence technology breakthroughs and industrial applications, and the “engineer dividend” has fully demonstrated the advantages of China’s manufacturing industry. Strong policy support has accelerated the transformation of artificial intelligence technology, all of which have enhanced the valuation levels of Chinese technology enterprises. The technology – led bull market is expected to last throughout the year, continuously driving the market focus upward.
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