China's Heatwave Is Minting Money: A Deep Dive into "High Temperature" Concept Stocks

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Key Points

China’s heatwave is fueling a boom in “High Temperature” concept stocks, primarily driven by surging electricity demand.
The power sector is experiencing significant institutional investment, with over ¥3.8 billion RMB ($525 million USD) net inflow on July 7, 2025, and nearly ¥12 billion RMB ($1.66 billion USD) over five days.
China’s maximum power load hit a record 1.465 billion kilowatts on July 4, 2025, a nearly 150 million kilowatt increase from the previous year.
Beyond the heat, structural reforms aiming for a unified national power market and the shift to daily trading contribute to the sector’s appeal.
The “cooling economy” also benefits, with record demand for refrigerants and a potential rebound for coal due to increased power plant consumption.

Institutional Fund Inflows into Power Sector (July 2025)
Date	Net Inflow (RMB)	Net Inflow (USD)
July 7, 2025	¥3.8 Billion	$525 Million
Last 5 Trading Days	¥12 Billion	$1.66 Billion

As China sizzles under a record-breaking heatwave, a new class of “High Temperature” concept stocks is absolutely taking off in the A-share market, and smart investors are taking notice.

It’s a simple, powerful story: scorching temps mean soaring electricity demand.

This has lit a fire under the power sector, but the opportunity is bigger than you think.

We’re talking about a ripple effect that touches everything from refrigerants to coal.

Let’s break down the five key asset categories that institutions are pouring money into right now.

Power Stocks Go Nuclear Amid Record Heat

On July 7, 2025, while the broader market was mixed, the power sector was a sea of green.

Multiple stocks slammed their daily trading limits, with hydroelectric, thermal power, and virtual power plant concepts leading the charge.

The gains were widespread. By the end of the day, a laundry list of companies hit their daily price limits, including:

Shaoneng Co., Ltd. (Shaoneng Gufen 韶能股份)
Huayin Power (Huayin Dianli 华银电力)
Huaguang Environmental Energy (Huaguang Huanneng 华光环能)
Shimao Energy (Shimao Nengyuan 世茂能源)
Shenzhen Nanshan Power (Shennan Dian A 深南电A)
Henan Energy (Yu Neng控股豫能控股)
Huadian Liaoning Energy (Huadian Liaoneng 华电辽能)
Leshan Electric Power (Leshan Dianli 乐山电力)
Xinjiang Zhonggang (Xin Zhonggang 新中港)
Huadian Energy (Huadian Nengyuan 华电能源)

And it wasn’t just a few lucky picks. Disen Gufen (迪森股份) surged over 18%, briefly touching a three-year high.

Follow the “Smart Money”

This isn’t just retail hype. Institutional capital is flooding into the sector.

On July 7 alone, the power industry saw a net inflow of over ¥3.8 billion RMB ($525 million USD) from major institutional funds.

Zoom out to the last five trading days, and that number balloons to nearly ¥12 billion RMB ($1.66 billion USD).

Why the sudden rush?

Data from the National Energy Administration tells the story. On July 4, 2025, China’s maximum power load hit 1.465 billion kilowatts — a new all-time high.

That’s a jump of nearly 150 million kilowatts from the same time last year. Think about that. It’s an insane increase in demand, and the grid is feeling the pressure.

As Zhang Jinming, a top analyst at Guosheng Securities (Guosheng Zhengquan 国盛证券), puts it, the combination of summer peak demand and the upcoming earnings season makes the power sector a prime target for capital.

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China’s Peak Power Load (July 4, 2025)
Date	Peak Load (Billion kW)	Year-over-Year Increase (Million kW)
July 4, 2025	1.465	~150

It’s Not Just the Weather: Three Core Drivers for Power Assets

While the heatwave is the obvious trigger, there are deeper, more structural reasons why institutions are bullish on Chinese power assets.

A huge one is the ongoing reform of China’s power industry.

The government is pushing hard to build a unified national power market, aiming for an initial system by 2025 and a largely complete one by 2030.

Just recently, the Southern Regional Power Market moved into a continuous settlement trial.

This is a big deal.

It means trading, which used to happen in clunky weekly or monthly blocks, can now happen daily. This creates more accurate and stable price signals—a huge win for market efficiency and investors.

Sun Fei, an analyst at Xiangcai Securities (Xiangcai Zhengquan 湘财证券), recommends focusing on three key drivers in this new environment:

Hydroelectric Power: These are your stable, long-term players. They have solid fundamentals and are perfectly positioned to benefit from the unified national market.

Thermal Power: The story here is margin improvement. With falling coal costs (their main input) and assets in high-demand regions, their performance is set to pop.

Green Power: As existing wind and solar projects deliver stable profits, the whole sector is getting a valuation bump. Look for leaders with strong operations and access to prime resource areas.

The Allure of High-Dividend Defensive Plays

In a rocky global market, predictable cash flow is king.

That’s why high-dividend stocks are getting so much love.

Li Rong from Guojin Securities (Guojin Zhengquan 国金证券) points out that with long-term interest rates falling, the dividend yields in the power sector look incredibly attractive compared to 10-year government bonds.

Her advice for the second half of the year? Focus on undervalued dividend stocks where you can expect an increase in payouts.

She also highlights two other areas with high-dividend potential:

Waste-to-Energy: This industry has matured and is now spitting out positive free cash flow. The logic for increasing dividends here is rock-solid.

Nuclear Power: While still in a high-investment phase, the business model (high fixed costs) generates massive operating cash flow. Once capex growth slows, these companies could become dividend machines.

Analyst Recommendations for Power Sector Focus

Sun Fei (Xiangcai Securities): Focus on Hydroelectric Power (stable, long-term), Thermal Power (margin improvement from falling coal costs), and Green Power (stable profits, valuation bump).
Li Rong (Guojin Securities): Focus on undervalued dividend stocks with potential for payout increases, Waste-to-Energy (matured, positive free cash flow), and Nuclear Power (massive operating cash flow potential).
Zhang Jinming (Guosheng Securities): Power sector is a prime target due to summer peak demand and upcoming earnings season.
Yang Lin (Guoxin Securities): Refrigerant prices expected to climb through Q3 due to low inventories and “trade-in” policies.
Zuo Qianming (Cinda Securities): Coal sector offers compelling “offensive and defensive” characteristics due to increased power plant consumption and tight supply-demand picture.

The “Cooling Economy”: Refrigerants and Coal Get a Boost

The heatwave’s impact doesn’t stop at the power plant. Two related sectors are also seeing their allocation value rise: refrigerants and coal.

Refrigerants & Cold Chain

It’s no surprise that demand for cooling is through the roof.

The cold chain logistics index spiked to a ten-year high on July 7, with stocks like Snowman Group (Xueren Jiduan 雪人集团), Changhong Meiling (Changhong Meiling 长虹美菱), and Binglun Environment (Binglun Huanjing 冰轮环境) all rallying.

According to Guoxin Securities (Guoxin Zhengquan 国信证券) analyst Yang Lin, Q2 is the traditional peak season. With low inventories and government “trade-in” policies stimulating demand, refrigerant prices are expected to climb through Q3.

The Contrarian Case for Coal

Coal has been in a slump for most of 2025. But don’t count it out just yet.

Zuo Qianming of Cinda Securities (Xinda Zhengquan 信达证券) argues that the sustained heatwave will drive up daily coal consumption at power plants.

This, combined with falling port inventories, could be the catalyst for a price rebound.

Looking out 3-5 years, the supply-demand picture for coal remains tight.

High-quality coal companies offer a unique combination: high barriers to entry, massive cash flow, and high dividend yields.

Zuo believes that as prices bottom out, the sector offers a compelling, cost-effective mix of both “offensive and defensive” characteristics.

As temperatures continue to set records, tracking the capital flows into these “High Temperature” concept stocks could be one of the hottest trades of the year.