China's A-Share Three Major Indices Open Lower Collectively, Non-Ferrous Metals Sector Leads Decline
N.R. Finch
China's three main A-share indices opened lower Thursday — the Shanghai Composite down 0.34%, with non-ferrous metals leading losses; three brokerages now disagree on whether the tech rally still offers value, making the mid-year earnings season a critical test.
What fell at the open?
The Shanghai Composite opened down 0.34% and the ChiNext down 0.32% — all three benchmarks started weak.
Non-ferrous metals, supercapacitors, and military electronics led the decline; the broader market stayed split.
This means → capital is not retreating across the board — it is draining out of traditional sectors, the "old trade."
Where does the tech rally's money come from — and what's the risk?
Shenwan Hongyuan (申万宏源) notes the main fuel behind this tech run is sector ETFs and single-theme active mutual funds.
Both product types have high investor turnover — buyers chase on the way up and redeem quickly once paper gains shrink.
In plain terms = the money pushing the rally is "restless money." Once gains dip back toward breakeven, a short burst of redemptions can amplify volatility sharply.
Can the tech trade still be chased?
Orient Securities (东方证券) stays bullish, arguing that AI computing, optical communications, and memory chips remain in a high-activity cycle — tech growth is still the core thread.
Yet the firm warns: after a sustained run, crowding in these trades has risen markedly, overall value-for-money is declining, and bigger swings may follow.
This means → the direction hasn't changed, but the entry price has — latecomers now face far more drawdown risk than a month ago.
Where is the money actually moving?
Founder Securities (方正证券) observes capital accelerating out of traditional sectors into optical communications, PCBs, and semiconductors.
The split is stark: tech up, cyclicals down — a textbook rotational market.
Founder's advice: hedge both sides — keep tech-growth exposure but reserve a portion for cyclical names with visible earnings momentum.
What exactly do the three brokerages disagree on?
The core dispute is tech-sector value-for-money: Orient says momentum is intact but expensive; Shenwan Hongyuan says the fund structure itself is a risk source; Founder says keep concentrating but hedge.
This reflects a market that has moved past the "buy any tech name and win" phase into one that demands picking sub-sectors carefully.
All three point to the same verification window — mid-year earnings disclosures. Whether profits actually come through will determine if the crowded tech trade breaks higher or pulls back.
Content is for reference only, not financial advice.