Top 10 Chinese Financial Institutions Break Down What’s Next for A-Shares as Market Sentiment Hits Bottom

The Chinese stock market just had a week worth paying attention to.

The Shanghai Composite Index (Shangzheng zongzhi 上证综指) climbed 1.33%, the Shenzhen Component Index (Shenzhen chengzhi 深证成指) ticked up 0.49%, and the ChiNext Index (Chuangyeban zhi 创业板指) rallied 1.52%.

But here’s what matters: the real story isn’t what happened this week—it’s what happens next.

We analyzed insights from 10 of China’s biggest financial institutions to understand where A-shares are headed.

Spoiler alert: most of them think we’re at an inflection point.

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The Market Recovery You Just Witnessed

• Turnover Drop: 48% decline from recent peak
• Tech Sector Correction: 25% average decline (vs 13% historical norm)
• Valuation Percentile: 65%-70% (Historical bottom range)

After weeks of pressure, Chinese stocks are showing signs of stabilization.

Three major indices all moved higher this week, signaling that sellers might be taking a breather.

But the consensus among institutional players?

The real catalyst is coming, and it has everything to do with what happens in Beijing.

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Huajin Securities (Huajin Zhengquan 华in证券): Sentiment Bottoming Out, Valuations Screaming “Buy”

Here’s the thesis: domestic tailwinds are building, external risks are contained, and valuations suggest the pain is mostly over.

According to Huajin Securities (Huajin Zhengquan 华金证券), three things are lining up:

• Policy support is ramping up.
  More proactive measures are coming from the government.
• External headwinds are manageable.
  Middle East tensions aren’t moving markets, and U.S.-China relations remain stable.
• Valuations are at historical lows.
  The Shanghai Composite’s price-to-earnings ratio has fallen back to the 65%-70% percentile—a level that typically marks major market bottoms.

The data is brutal: since the adjustment started on June 22, total A-share turnover has dropped a stunning 48% from its peak.

Meanwhile, leading tech sectors like Electronics (Dianzi 电子), Communication (Tongxin 通信), and Building Materials have seen average declines of 25%—significantly exceeding the historical correction norm of 13%.

Translation: oversold is an understatement.

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Galaxy Securities (Yinghe Zhengquan 银河证券): The Politburo Meeting Is the Catalyst We’re Waiting For

Here’s where it gets interesting.

Next week’s policy meetings are the real market mover.

Galaxy Securities (Yinghe Zhengquan 银河证券) is zeroing in on two major events:

• The July Politburo meeting.
  This will set the tone for macro policy and industrial strategy for the entire second half of the year.
  Given recent Q2 economic data, expect the focus to shift toward “precise irrigation” of liquidity—targeting internal demand and what Beijing calls “New Quality Productive Forces” (emerging sectors like AI and high-end manufacturing).
• U.S. tech earnings.
  How American tech giants perform will directly impact valuations for Chinese tech stocks.

The recommendation?

Run a balanced portfolio, stay patient on tech earnings, and grab recovery opportunities in beaten-down sectors.

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Industrial Securities (Xingye Zhengquan 兴证证券): Tech Concentration Isn’t a Reason to Panic

Here’s the hot take that’s been making rounds: a Q2 fund report showed that Electronics and Communication holdings hit nearly 60% of fund portfolios.

That’s a record.

And it spooked a lot of people into thinking funds were about to abandon tech en masse.

Industrial Securities (Xingye Zhengquan 兴证证券) isn’t buying the panic.

Here’s their case:

• Yes, the concentration is historically extreme.
• But it reflects what the market is actually doing—not necessarily what fund managers are actively choosing to do.
• One report shouldn’t kill your conviction on structural tech trends.
• The real story is the underlying industrial dynamics, not fund allocation percentages.

What they’re waiting for: more U.S. earnings reports, global central bank decisions, and signals from Beijing to clarify where structural opportunities actually live.

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Shenwan Hongyuan (Shenwan Hongyuan 申万宏源): The Capital Cycle Just Shifted

Q2 capital flows tell a fascinating story: money is splitting in two directions.

Some capital is chasing high-volatility tech products.

Other capital is hiding in low-volatility fixed-income products.

That divergence is a signal.

According to Shenwan Hongyuan (Shenwan Hongyuan 申万宏源), the July adjustment marks a shift from a positive capital cycle to a negative one.

The June 30 peak?

That was the mid-term high for the AI computing power boom.

A new uptrend needs major new catalysts—specifically, major breakthroughs in AI industrial applications.

Until then, expect consolidation.

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Everbright Securities (Guangda Zhengquan 光大证券): Play Defense, Hunt for Value

The forecast: more consolidation ahead.

Why?

Policy signals are positive, but domestic demand recovery is still weak.

That’s a recipe for sideways markets, not rallies.

Short-term survival strategy: prioritize stability and income.

Everbright Securities (Guangda Zhengquan 光大证券) recommends allocating to:

• High-dividend assets:
  Banks (Yinhang 银行) and Public Utilities (Gongyong shiye 公用事业)

Long-term thesis: focus on three chains:

• The “Hard Tech” chain:
  Electronics (Dianzi 电子), Communication (Tongxin 通信), and Defense (Jun’gong 军工)
• The export chain
• Upstream resources:
  Non-ferrous Metals (Youse jinshu 有色金属) and Coal (Meitan 煤炭)

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China Merchants Securities (Zhaoshang Zhengquan 招商证券): The Policy Bottom Has Arrived

Recent signals from the China Securities Regulatory Commission (CSRC) and state-owned enterprises regarding increased holdings, buybacks, and dividends suggest something important: the policy floor is in.

What that means:

• Capital outflow pressures have been released.
• The market is bottoming.
• Short-term volatility from TMT concentration is noise, not signal.
• The real story will be told by earnings.

China Merchants Securities (Zhaoshang Zhengquan 招商证券) is focused on sectors where earnings are actually improving:

• TMT price-increase chains
• Resource products with improving volume and pricing
• Batteries (Dianchi 电池)
• Medical Devices (Yiliao qixie 医疗器械)
• Innovative Drugs (Chuanyao 创新药)
• Domestic and overseas computing power

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Guosen Securities (Guosen Zhengquan 国信证券): The Extreme Gap Creates Opportunity

Here’s where it gets wild: sector rotation is about to get real.

The AI boom narrative is still alive, but market expectations are fragmenting.

Current holdings tell the story:

• Electronics and Communication holdings are at the 100th percentile since 2013—meaning they’ve never been more crowded.
• Meanwhile, Food and Beverage (Shipin yinliao 食品饮料), Healthcare (Yiyao shengwu 医药生物), and Real Estate (Fangdichan 房地产) are trading at below the 20th percentile—historically dirt cheap.

According to Guosen Securities (Guosen Zhengquan 国信证券), this extreme gap creates the conditions for two things:

• Market rotation away from concentrated tech positions
• A “catch-up” rally in non-AI sectors where valuations has collapsed

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Zheshang Securities (Zheshang Zhengquan 浙商证券): The Bottom Is In, Get Bullish

This one’s bullish.

Large capital is flowing into mainstream ETFs.

That’s a clear signal: the market has bounced off the bottom.

According to Zheshang Securities (Zheshang Zhengquan 浙商证券):

• The Shanghai Composite has found support at the 20-month moving average.
• It has momentum to challenge the 4,000-point mark.
• The ChiNext index has formed a complete bottom structure.
• The pressure from earlier market adjustments has been released.

Translation: stop being defensive and get proactive.

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Open Source Securities (Kaiyuan Zhengquan 开源证券): Style Rotation Will Be Limited

Here’s the counterargument to the rotation thesis:

Yes, low-valuation sectors have seen some recovery.

But a full fundamental shift hasn’t happened yet.

The domestic economy still shows “strong production, weak demand” characteristics.

Tech manufacturing remains the mid-term leader for earnings growth.

Unless the macroeconomic pattern shifts drastically, sector rebalancing will be temporary—not a wholesale rotation from Tech to Value.

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Great Wall Securities (Changcheng Zhengquan 长城证券): July Is a Testing Month—But Don’t Panic

July brings major policy meetings and mid-year earnings reports.

A-shares will face tests.

But here’s the thing: there’s no reason for excessive pessimism.

According to Great Wall Securities (Changcheng Zhengquan 长城证券):

• Leverage risks in global tech stocks are being released, which is healthy.
• Domestic policy expectations are rising.
• As mid-year reports come out, the market will focus on “earnings verification” for the tech sector.
• Smart money is moving from “Tech Clustering” to a more balanced allocation strategy.

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The Bottom Line: A-Shares Are Entering a New Phase

Here’s what 10 of China’s biggest financial institutions are agreeing on:

• Sentiment has cooled enough to warrant optimism.
  Valuations are at historical lows, turnover has dried up, and oversold sectors are screaming “buy.”
• Policy is the next major catalyst.
  The Politburo meeting will set the tone for the second half of the year, and “New Quality Productive Forces” will likely dominate Beijing’s focus.
• Tech concentration is extreme, but rotation will be messy.
  Sector rebalancing is coming, but it won’t be a clean shift away from technology—it’ll be more like a partial unwinding and reallocation within quality growth stories.
• Earnings will be the ultimate arbiter.
  Whether it’s U.S. tech giants or Chinese mid-year reports, actual business performance will trump sentiment and narrative.

The common thread?

The market is shifting from “don’t buy” to “selectively buy,” but conviction is still being built as we wait for major catalysts and earnings verification.

For investors tracking A-shares, the next few weeks will tell you whether sentiment has truly bottomed out and whether Chinese equities are ready for the next leg higher.

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References

• Top Ten Institutions Discuss the Market: Sentiment Has Cooled Sufficiently, Awaiting Politburo Guidance – East Money Research Center
• Financial News and Stock Quotes – East Money (Dongfang Caifu 东方财富)
• Market Data and Announcements – Shanghai Stock Exchange
• Company Disclosure and Market Trends – Shenzhen Stock Exchange