A-Share Midday Review: ChiNext Index Falls 2.27% as Chips, Healthcare, and Major Financials Buck the Trend
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China's three main indices slid into midday, with ChiNext down 2.27% — yet chips, pharma and financials rallied against the tape. This means → the market isn't in broad retreat; capital is pruning within tech and rotating toward higher-certainty bets.
How far did the market fall, and where did the money go?
The Shanghai Composite fell 0.37%, Shenzhen Component 1.83%, and ChiNext 2.27% — the sharpest drop.
Half-day turnover hit RMB 2.32 trillion, down RMB 187 billion from the prior session. Shrinking volume suggests caution, not panic selling.
Non-ferrous metals, PCB, optical communications and lithium-battery plays led the decline — all crowded trades from the prior rally.
Why did chip stocks suddenly rally?
Power semiconductors (chips that switch high currents — key for EVs and chargers) and MCUs (microcontrollers — the "mini-brains" inside electronic devices) led the move. National Technology and Shanghai Belling hit the daily limit.
The catalyst: Samsung's sixth-gen high-bandwidth memory HBM4 crossed $1 billion in sales — just four months after it became the first to mass-produce in February.
This means → HBM4 is commercializing far faster than expected. AI-driven compute demand is accelerating memory-chip revenue, and A-share chip names rode the momentum.
What's the logic behind the pharma and financials rally?
More than ten pharma stocks hit the daily limit, including Xinhua Pharma, Hainan Haiyao, HD Pharma and Teyi Pharma. The direct trigger: Xinhua Pharma's in-house Class-1 innovative drug LXH-2103 injection received clinical-trial approval.
Financials extended the prior day's strength. Yinzhijie hit the 20 cm limit, Changjiang Securities posted a second consecutive limit-up, while CITIC Securities, GF Securities and Dazhihui followed.
In plain terms = the Lujiazui Forum policy signals — channeling pension and insurance funds into equities, backing M&A and refinancing, deepening ChiNext/STAR reforms — gave financials a complete narrative: "more money is coming, and the rules are loosening."
Why is phosphorus chemical also rallying?
Liuguo Chemical posted a second consecutive limit-up; Chuanfa Longmang, Chuanjinnuo, Kingenta and Yuntianhua followed.
State broadcaster CCTV reported that lithium iron phosphate (LFP) — the dominant cathode material in EV batteries — has doubled in price year-on-year. A roughly 400 kg package now costs over RMB 25,000, yet demand remains strong.
This means → phosphorus chemicals have shifted from a "cyclical commodity" to a "new-energy upstream resource." Price momentum plus a supply-demand gap lets the market trade them as an extension of the lithium battery chain.
What do brokerages think — style rotation or a short breather?
Tianfu Securities leans cautious: with mid-year earnings pre-announcements approaching, the market will weight fundamentals more heavily. Rising crowding, faster rotation and speculative spillover into resources are classic congestion signals.
Caixin Securities sits in the middle: the prior day's volume-price surge shows short-term upside momentum is intact, and tech-cyclical rotation could be constructive — but a genuine style switch needs more time. When global tech giants report mid-July to late August, AI-sector pricing will return to earnings.
Huaxi Securities leans bullish: the ChiNext/STAR index hitting a volume-backed all-time high confirms a new up-cycle; synchronized growth in turnover and margin balances signals a positive-feedback loop from fresh capital inflows.
Tech crowding — short-term digestion or the start of a style rotation?
BULL
Trend intact
The ChiNext/STAR index broke to a volume-backed all-time high; fresh-capital feedback loop is underway.
Earnings will validate
Global tech mid-year reports land Jul–Aug; AI logic can re-anchor to fundamentals.
BEAR
Crowding too high
Intra-tech divergence widening, speculation spilling into resources — classic congestion signals.
Mid-year report risk
If earnings disappoint, current valuations have no safety cushion.
In plain terms = the three brokerages are arguing about the same thing: tech is crowded — is it just catching its breath before resuming, or is it time to change lanes? The mid-year earnings season will be the tiebreaker.
What to watch this afternoon?
Volume is the key: whether turnover recovers in the afternoon session decides if this is a "low-volume shakeout" or a "high-volume exit."
Staying power of the three counter-trend lines — chips, pharma, financials: a pullback would signal short-lived risk-off clustering; continued strength would validate the rotation story.
This reflects the market's real debate right now — not "will it go up?" but "who takes over from tech as the lead sector?"
Content is for reference only, not financial advice.