China A-Share Market Update (June 5, 2025): Virtual Power Plants Surge, EV Price Wars & Key Stock Picks

Diving into the latest China A-Share Market movements for June 5, 2025, we’re seeing some fascinating shifts and opportunities unfold.

The market opened with a generally positive, albeit slight, upward trend for its major indices.

Let’s break down the action.

Market Snapshot: A-Shares Show Modest Gains Amid Sector Volatility

China’s A-share market kicked off the day with its three main indices ticking up slightly on June 5, 2025.

Here’s a quick look at who’s winning and who’s feeling the pinch:

Hot Sectors on the Rise 🔥

• Virtual Power Plants (Xuni Dianchang 虚拟电厂) – This is a big one, more on this below!
• Digital Sentinels (Shuzi Shaobing 数字哨兵)
• Sports Industry (Tiyu Chanye 体育产业)
• Lottery Concepts (Caipiao Gainian 彩票概念)
• CPO Concepts (CPO Gainian CPO概念)
• F5G Concepts (F5G Gainian F5G概念)
• High-Voltage Fast Charging (Gaoya Kuaichong 高压快充)
• Gaming (Youxi 游戏)
• Smart Grid (Zhineng Dianwang 智能电网)

Sectors Taking a Hit 📉

• Jewelry (Zhubaoshoushi 珠宝首饰)
• Beauty and Personal Care (Meirong Huli 美容护理)
• Weight Loss Drugs (Jianfei Yao 减肥药)
• Pet Economy (Chongwu Jingji 宠物经济)
• Food and Beverage (Shipin Yinliao 食品饮料)
• Sugar Substitute Concepts (Daitang Gainian 代糖概念)
• Innovative Drugs (Chuangxin Yao 创新药)

Midday Market Numbers 📊

As of the midday close, here’s where things stood:

• The Shanghai Composite Index (Shangzheng Zhishu 上证指数) rose by 0.08% to 3378.82 points.
• The Shenzhen Component Index (Shenzhen Chengchi 深证成指) climbed 0.16% to 10160.75 points.
• The ChiNext Index (Chuangyeban Zhi 创业板指) gained 0.32% to 2031.39 points.
• The STAR 50 Index (Kechuang 50 Zhishu 科创50指数) rose 0.19% to 987.98 points.
• The BSE 50 Index (Beizheng 50 Zhishu 北证50指数), however, fell 0.72% to 1428.38 points.

Across the entire market, 2118 stocks were trading higher.
Meanwhile, 3048 stocks were in the red.
Notably, 54 stocks hit their upper trading limit – a strong signal for those particular equities! 🚀
The combined turnover for the half-day session in the Shanghai and Shenzhen markets totaled a significant ¥714.3 billion RMB ($99.21 billion USD).

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Big News Driving the Market 🚀

Several key developments are influencing investor sentiment today.

Power Up! New Energy System Pilots & Hot Stocks ⚡

On June 4, the National Energy Administration issued the “Notice on Organizing the First Batch of Pilot Projects for the Construction of a New Power System.”
This is a big move!
The notice proposes focusing initial pilot work on seven crucial areas:

• Grid-forming technology (Gouwangxing Jishu 构网型技术)
• System-friendly new energy power stations (Xitong Youhaoxing Xinnengyuan Dianzhan 系统友好型新能源电站)
• Smart microgrids (Zhineng Weidianwang 智能微电网)
• Coordination of computing power and electricity (Suanli yu Dianli XieTong 算力与电力协同) – Super important for data centers and energy efficiency.
• Virtual power plants (Xuni Dianchang 虚拟电厂) – A major theme gaining traction!
• Large-scale, high-proportion new energy external transmission (DaguiMo Gaobili Xinnengyuan Waisong 大规模高比例新能源外送)
• Next-generation coal power (Xinyidai Meidian 新一代煤电) – Interesting to see continued focus here amidst green pushes.

This announcement is particularly impactful for Virtual Power Plant (VPP) stocks in the A-share market.
There are currently 66 listed companies in the VPP space.
And institutional investors are definitely taking notice.
Twenty of these VPP stocks received ratings from 5 or more institutions, which accounts for over 30% of the VPP players.
Leading the pack in terms of institutional attention are:

• Xuji Electric (Xuji Dianqi 许继电气): Backed by 24 rating institutions
• Guoneng Rixin (Guoneng Rixin 国能日新): Watched by 22 rating institutions
• Huadian Power International (Huadian Guoji 华电国际): Followed by 18 rating institutions

According to institutional consensus forecasts, get ready for potential big moves:
Langxin Technology (Langxin Jituan 朗新集团), iSoftStone (Ruantong Dongli 软通动力), and Ailuo Energy (Ailuo Nengyuan 艾罗能源) are expected to achieve a doubling or a significant turnaround in net profit attributable to the parent company in 2025. 📈

China’s EV Price War: 70+ Models Discounted, Who Foots the Bill? 🚗💨

The competition in China’s auto market is absolutely fierce.
According to incomplete stats from 21st Century Business Herald, in just seven days (May 23 to May 30), over 70 vehicle models from major brands including BYD (Biyadi 比亚迪), Geely (Jili 吉利), and Chery (Qirui 奇瑞) initiated price cuts and promotions.
This isn’t just a minor scuffle; it’s an ongoing battle.
A report by the China Automobile Dealers Association sheds light on the financial impact:

• The automobile industry’s profit margin was a mere 4.3% in 2024.
• This is lower than the profit margin of the overall downstream industry and also a dip from 2023 levels.
• In the first quarter of this year (2025), this profit margin further declined to just 3.9%.

The pressing question remains: Who ultimately pays for this intense price war?
It appears that supplier profit margins continue to be squeezed.

Meet the “Hong Kong Stock Three Sisters” – New Consumer Powerhouses Soaring! 🛍️✨

Shifting focus to Hong Kong, three new consumer companies listed on its stock exchange are making significant headlines.
On June 4, POP MART (Paopao Mate 泡泡玛特), Mixue Group (Mixue Jituan 蜜雪集团), and Laopu Gold (Laopu Huangjin 老铺黄金) all saw substantial gains, with their share prices hitting new highs.
Their combined total market value? An impressive ¥730 billion HKD ($93.59 billion USD)! 🤯
They’ve been dubbed the “New Consumer Three Sisters” in the Hong Kong stock market.
Their success is driving collective gains in both A-share and Hong Kong stock consumer sectors.
As new consumption trends ignite the capital market, more and more consumer fund managers are restructuring their investment logic for consumer stocks.
This signals a dynamic shift in how investors are viewing the future of consumer spending.

• 2024 Profit Margin: 4.3%
• Q1 2025 Profit Margin: 3.9%

What the Big Players Are Saying: Institutional Insights 🧐

Let’s tap into the minds of market experts and see what institutional research is highlighting.

CITIC Securities (Zhongxin Zhengquan 中信证券) on Unmanned Vehicles 🤖

A research report by CITIC Securities (Zhongxin Zhengquan 中信证券) indicates growing optimism for unmanned vehicles.
They noted that on May 27, Jijiu Intelligent released a new type of unmanned vehicle featuring:

• Record-low procurement prices
• Lower monthly service fees
• Ongoing iterations and upgrades in core components and algorithms

This tech advancement could potentially enable significant cost reductions in last-mile delivery.
CITIC Securities projects that the procurement volume of unmanned vehicles by major express delivery companies is expected to more than double in 2025.
The primary methods of procurement include leasing and independent purchases by franchise partners.
However, two main prerequisites for large-scale expansion are:

• Road access rights (Luquan Zhunru 路权准入)
• Service point parcel volume density (Wangdian Jianliang Midu 网点件量密度)

If unmanned vehicles are purchased (as opposed to leased), under appropriate assumptions and compared to traditional fuel vehicles of similar size, CITIC estimates that using them for branch line distribution (Zhixian Peisong 支线配送) at the last mile can achieve a cost optimization of ¥0.1 to ¥0.2 RMB ($0.014 to $0.028 USD) per parcel.
The cost optimization potential may be reduced for leased vehicles.
The firm anticipates that further opening of road access rights will accelerate last-mile cost reduction.

CICC (Zhongjin Gongsi 中金公司) on Small Appliances 🍳

CICC (Zhongjin Gongsi 中金公司) commented that demand in the small appliance industry (Xiao Jiadian Hangye 小家电行业) is expected to continue its recovery trend this year.
This recovery is driven by:

• The trade-in policy for appliances stimulating purchases.
• The low base effect (Dijishu Xiaoying 低基数效应) from previous periods.

In this environment:

• Industry competition is easing.
• Companies are focusing on high-quality development (Gaopinzhi Fazhan 高质量发展).
• Average industry prices (Hangye Junjia 行业均价) are further recovering.
• Platform fee reductions (Pingtai Jiangfei 平台降费) are easing pressure on companies.

Under these combined influences, the profitability of small appliance companies is expected to significantly improve.
At the company level, CICC suggests focusing on improved profitability.
Amidst moderate demand recovery:

• Easing price wars and internal structural optimization ensure stable gross profit margins (Maolilü 毛利率).
• Platform fee reductions and internal cost control reduce expense ratios (Feiyonglü 费用率).

Ultimately, this should lead to the recovery of company profitability.
Small appliance companies had a lower base previously, and industry and company-specific factors should bring about an inflection point in performance.
Profitability is expected to improve more significantly than revenue.

China Galaxy Securities (Yinhe Zhengquan 银河证券) on Oil Prices ⛽

China Galaxy Securities (Yinhe Zhengquan 银河证券) stated that while supply-side support from the OPEC+ production cut alliance (OPEC+ Jianchan Lianmeng OPEC+减产联盟) has marginally weakened recently, other factors are in play.
The Northern Hemisphere travel peak season (Beibanqiu Chuxing Wangji 北半球出行旺ji) and the Middle East power generation peak season (Zhongdong Fadian Wangji 中东发电旺ji) will temporarily support crude oil demand.
Brent crude oil prices are expected to oscillate between $60-70 USD/barrel.
Crucially, cost is not currently the key factor determining industry profitability.
The key is to observe improvements in industry supply and demand.
Recent global trade tensions continue to fluctuate, and domestic economic stimulus policies are expected to intensify.
China Galaxy Securities remains optimistic about structural opportunities in the chemical industry (Huagong Hangye 化工行业) as domestic demand potential is unleashed.

Huatai Securities (Huatai Zhengquan 华泰证券) on Architecture & Building Materials 🏗️

A research report by Huatai Securities (Huatai Zhengquan 华泰证券) indicated that over the first five months of this year, both the Architecture (Jianzhu 建筑) and Building Materials (Jiancai 建材) indices showed W-shaped oscillating trends.
Building Materials relatively outperformed the CSI 300 index due to improved fundamentals in the first quarter of 2025.
Looking ahead to the second half of 2025, Huatai Securities believes:
1. Demand Influences:

• Impacted by domestic investment policies.
• The potential turning point for real estate to stop falling and stabilize (Dicang Zhidie Huiwen Guaidian 地产止跌回稳拐点).
• Attention should be paid to three domestic renovation demands:
  • Stock renovation (Cunliang Fanxin 存量翻新)
  • Urban renewal (Chengshi Gengxin 城市更新)
  • New industry services (Xinchanye Fuwu 新产业服务)
• Overseas expansion (Haiwai Chuhai 海外出海) also presents opportunities.

2. Supply Side (Gongjice 供给侧) Dynamics:

• There’s a noticeable increase in enterprise transformation and cross-industry development (Qiye Zhuanxing Kuajie 企业转型跨界).
• Self-regulatory actions in the cement and glass industries have been inconsistent.
• Debt resolution and recovery (Huazhai Xiufu 化债修复) are expected to extend from small and medium-sized private enterprises (Zhongxiao Minqi 中小民企) to central and state-owned enterprises (Yanggouqi 央国企).

In the absence of significant short-term policy or fundamental catalysts, Huatai recommends allocating along the main themes of transformation, cross-industry development, and segment-specific or regional prosperity.

Everbright Securities (Guangda Zhengquan 光大证券) on Market Momentum 📈

Everbright Securities (Guangda Zhengquan 光大证券) pointed out that the market has seen broad gains for two consecutive days.
Sector hot spots (Ticai Redian 题材热点) have been rotating.
Although volume has not increased significantly, market sentiment continues to recover.
The market is expected to continue its rebound momentum (Fantan Zhishi 反弹之势), with sector hot spots likely playing a leading role.

Huaxi Securities (Huaxi Zhengquan 华西证券) on Tech Sector Opportunities 💻

Huaxi Securities (Huaxi Zhengquan 华西证券) indicated that the market is actively pricing in a further easing of China-US trade relations (Zhong-Mei Maoyi Guanxi 中美贸易关系).
However, the possibility of renewed fluctuations in Trump’s tariff policy (Telangpu Guanshui Zhengce 特朗普关税政策) still needs to be guarded against.
Huaxi notes that the recent market seems to have a “filter” for positives (Lihao de “Lüjing” 利好的“滤镜”):

• It trades on the expectation of a phone call between the Chinese and US heads of state while temporarily ignoring the US claim that China violated the consensus of the China-US Geneva trade talks.
• It trades on the setback of Trump’s tariff policy while temporarily ignoring that alternative solutions for Trump’s tariff increases still exist.

Considering the low expected index volatility (Zhishu Bodonglü Yuqi 指数波动率预期) and the high crowding level (Yongjidu 拥挤度) in the CSI 2000 (Zhongzheng 2000 中证2000) index, maintaining positions (Baoliu Cangwei 保留仓位) and seeking layout opportunities in low-valuation sectors (Diwei Bankuai 低位板块) may be a relatively stable trading strategy.
It is perhaps driven by this logic that the technology sector (Keji Bankuai 科技板块) has seen a moderate rebound in performance and crowding level since the end of May.
Huaxi suggests some funds may have already started a left-side layout (Zuoceshuju 左侧布局) in tech.
If technology stocks experience a significant pullback (Xianzhu Huitiao 显著回调) subsequently, it might present a more ideal time to increase holdings.

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Key Takeaways & What’s Next for the China A-Share Market

So, what’s the big picture from June 5, 2025?
The China A-Share Market is buzzing with activity, from the rise of Virtual Power Plants driven by new government initiatives to the ongoing EV price slugfest squeezing margins.
Consumer stocks, especially the “Hong Kong Three Sisters,” are showing incredible strength, forcing a rethink of investment playbooks.
Institutional investors are spotting opportunities in areas like unmanned delivery vehicles and the recovering small appliance sector.
While global trade and policy uncertainties linger, there’s a cautious optimism, with some analysts suggesting strategic entries into tech if prices dip.
Keeping a close eye on these dynamic sectors and expert opinions will be crucial for navigating the evolving landscape of the China A-Share Market.

References

• A-share Major Indices See Slight Gains, Virtual Power Plant Concept Rises, Jewelry Sector Pulls Back – East Money
• First Batch of New Power System Construction Pilots Launched, 20 Stocks Gain Institutional Attention – East Money
• “Hong Kong Stock Three Sisters” Reach New Highs! Fund Managers Restructure Consumer Investment Logic – East Money

• Xuji Electric (许继电气): Backed by 24 rating institutions
• Guoneng Rixin (国能日新): Watched by 22 rating institutions
• Huadian Power International (华电国际): Followed by 18 rating institutions
• Langxin Technology (朗新集团): Expected significant profit turnaround in 2025
• iSoftStone (软通动力): Expected significant profit turnaround in 2025
• Ailuo Energy (艾罗能源): Expected significant profit turnaround in 2025