21st Century Business Herald reporter Yang Nana reported from Shanghai

On July 7th, the market opened lower and continued to decline, with all three major indices closing down. The SSE Index fell by 1.26% to close at 3990.24 points, breaching the 4000-point threshold. The single-day trading volume shrank by over 510 billion yuan, falling back to 2.58 trillion yuan, ending the previous trend of exceeding 3 trillion yuan for several consecutive days.

From the market perspective, 4796 stocks fell, while only 693 stocks rose. Among the 31 first-level industries in the Shenwan classification, only the banking sector saw a slight increase of 0.2%, while sectors such as pharmaceuticals, comprehensive, and building materials all fell by more than 3.5%.

Market sentiment became cautious at one point, but when viewed from a longer perspective, this adjustment is more of a phase of digestion of the previously accumulated gains rather than a signal of a trend reversal. Many market participants and institutions emphasized that the investment logic and long-term value of Chinese assets have not changed. The SSE Composite Index had previously fallen below 4000 points in March and June, and after consolidating, it rebounded. "If one panics at the first sign of a drop, even ignoring the market fundamentals, it could lead to unnecessary losses, and concentrated emotional outbursts can easily result in a stampede."

Decreased Volume Releases Positive Signals

The single-day trading volume plummeted by over 500 billion yuan, which on the surface indicates an increase in cautious sentiment among investors. However, based on historical experience, a sharp decrease in volume often means that selling pressure tends to exhaust after a quick release in the short term. Jiang Yifan, an analyst at Shenwan Hongyuan Securities, analyzed that, the market remains cautious before macro data and policy signals become clear, with trading volume shrinking to recent lows, but the banking sector has attracted some safe-haven funds due to its high dividend attributes, while the semiconductor sector has seen inflows against the trend. This reflects that funds are not completely withdrawing but are undergoing structural reallocation.

It is noteworthy that on July 7th, the Sci-Tech 50 Index rose by 0.28% against the trend, with active performance in sub-sectors such as semiconductor wafers. Against the backdrop of continued expansion of global AI capital investment and unresolved supply bottlenecks, the fundamental support for the technology growth sector has not disappeared. Jiang Yifan believes that the market is transitioning from the "valuation expansion" phase to the "earnings verification" phase, where leading companies with real performance can digest high valuations, while purely concept-driven varieties face greater adjustment pressure, which is an inevitable process for the market to mature.

Additionally, a senior market participant told reporters that stock prices are influenced by multiple factors including the macro environment, liquidity, fundamentals, and market sentiment, and that normalized fluctuations within a certain range are a normal response to the interplay of market supply and demand, industry rotation, and macro adjustments, as well as a normal manifestation of self-regulation in the capital market.

The Macro Foundation Remains Solid

In the context of ongoing geopolitical conflicts and rising uncertainties globally, a complete industrial system, stable energy and key mineral supply chains, and the deep advantages of a large domestic market constitute a strong fundamental base for the Chinese economy The "14th Five-Year Plan" has established a clear development blueprint, and the predictability of fiscal and monetary policies has increased. Recently, the Lujiazui Forum also introduced a series of positive measures, and the policy dividends from refinancing reforms are being accelerated.

In a low-interest-rate environment, the allocation value of A-shares has further increased. Current market interest rates are at historical lows, with the June LPR quotation remaining unchanged for several months, at 3% for one year and 3.5% for five years or more. The weighted average interest rate for interbank lending in May was 1.31%, and the weighted average interest rate for pledged repos was 1.33%, both down 0.24 and 0.23 percentage points year-on-year, respectively. Against the backdrop of a continuously declining interest rate center and an exacerbated "asset shortage," the attractiveness of equity assets with solid fundamentals and stable returns has correspondingly increased. Jiang Yifan also mentioned in his analysis that major state-owned banks have recently held shareholder meetings intensively, presenting impressive operational results overall. Many bank management teams have stated that they will continue to adhere to a stable dividend mechanism, maintaining a high dividend payout ratio of around 30%.

At the same time, there is no need for excessive concern about liquidity. At the end of May, the balance of broad money (M2) was 353.67 trillion yuan, a year-on-year increase of 8.6%, maintaining a high growth rate. The scale of social financing stock was 458.81 trillion yuan, a year-on-year increase of 7.7%; from January to May, corporate medium- and long-term loans increased by 4.99 trillion yuan, and financial support for the real economy remains strong. From objective data, on July 7, the transaction volume of the two markets was 2.58 trillion yuan, although lower than the previous trading day, it was still significantly higher than the average daily level of 1.7 trillion yuan in 2025.

In terms of external demand, GF Securities also pointed out that the export growth rate in May exceeded expectations, with the technology and high-end manufacturing supply chains becoming core growth engines. In dollar terms, May exports increased by 19.4% year-on-year, an increase of 5.3 percentage points compared to April, exceeding market consensus expectations. The total monthly import and export value has exceeded 4 trillion yuan for three consecutive months, and the resilience of external demand provides strong support for the profitability of listed companies.

Batch of Positive Mid-Year Performance Forecasts

Another backdrop for the short-term market adjustment is the approaching window for mid-year report disclosures, where funds are becoming more selective about performance certainty. However, the semi-annual performance forecasts disclosed so far have been impressive, with most industries achieving "step-up" growth.

As of July 7 at 18:30, 34 companies on the Shanghai main board had released performance forecasts, with more than 30 companies forecasting profit growth or turning losses into profits, and 15 companies forecasting a net profit growth limit exceeding 100%. Companies such as China Merchants Securities, Songfa Co., and Haitong Development, which released performance forecasts on the evening of July 7, still forecast significant net profit growth despite high baselines.

The shipping and shipbuilding sectors are particularly prosperous. For example, Songfa Co. announced on the evening of July 7 that it expects a net profit attributable to the parent company of approximately 3.6 billion yuan for the first half of the year, an increase of 456.33% year-on-year. The company stated that the global shipbuilding market continued its high prosperity cycle in the first half of the year, with both the shipbuilding commencement and delivery volumes increasing, effectively boosting the company's profitability and achieving substantial growth in semi-annual performance China Merchants Energy announced on July 6 that it expects operating revenue for the first half of the year to be between 18.7 billion and 20.6 billion yuan, a year-on-year increase of 48% to 63%; it forecasts net profit attributable to shareholders of 6.6 billion to 7.3 billion yuan, with a year-on-year growth rate of 214% to 248%. Regarding the significant increase in performance, China Merchants Energy stated that during the reporting period, influenced by changes in supply and demand structure and geopolitical factors, the international oil tanker transportation market entered a super boom cycle, with spot freight rates on some routes reaching historical highs.

The brokerage sector also performed well. China Merchants Securities announced on the evening of July 7 that it expects net profit attributable to shareholders for the first half of the year to be between 10 billion and 11 billion yuan, an increase of 93% to 112% year-on-year; Guotai Junan Securities forecasted on July 5 that it would achieve a net profit of 20.003 billion to 20.511 billion yuan in the first half of the year, a year-on-year increase of 27% to 30%.

In addition, Hengli Petrochemical forecasted a net profit of 7.2 billion yuan, a year-on-year increase of 136%; YTO Express expects a net profit of 3.1 billion to 3.4 billion yuan for the first half of the year, a year-on-year increase of 69% to 86%. On the evening of July 7, Jinhui Co., Ltd. also released a performance forecast announcement stating that due to the year-on-year increase in silver and zinc metal prices and the increase in the production and sales of zinc concentrate compared to the same period last year, it expects net profit attributable to shareholders to be between 400 million and 420 million yuan, a year-on-year increase of 58.03% to 65.93%. Although the non-ferrous metal sector experienced a "rise and then fall" trend in the first half of the year, the overall profit growth of the industry remains considerable based on the performance forecasts disclosed by multiple companies.

The medium to long-term revaluation trend has not changed

Regarding the future market, several brokerages expressed relatively positive judgments. Changjiang Securities believes that Chinese assets are undergoing a revaluation trend, and driven by relatively abundant micro liquidity in the stock market, A-shares are expected to maintain relative strength in the short term; in the medium to long term, housing prices are stabilizing, the effects of "anti-involution" policies are becoming apparent, and the realization of technology industry logic is expected to support a sustained bull market.

Jiang Yifan mentioned that the current market capitalization of the electronics industry accounts for nearly 20%, while the banking sector accounts for about 9%, reflecting the trend of the AI industry in the capital market, supported by fundamentals. However, the "high valuation, high crowding, and high concentration" characteristics also make the industry sensitive to negative news, so the market needs to complete self-clearing through fluctuations and turnover. Additionally, on July 9, there will be dual macro catalysts: the release of domestic CPI and PPI data for June, with market attention on whether the "K-shaped differentiation" in prices continues; on the same day, the Federal Reserve will release the minutes of the June FOMC meeting, with half of the committee members expecting interest rate hikes within the year, and the tone of the minutes will influence global asset pricing. Before these two macro events unfold, the market is characterized by a strong wait-and-see sentiment, which is a rational rather than a panic response.

He Jiaye from Zheshang Securities stated that looking ahead, even if a trend market is difficult to emerge in July, "we still believe that the slow bull pattern of A-shares has not been broken, and after this round of adjustment, the market structure is expected to become more balanced." Regarding the U.S. stock market, although the AI bubble objectively exists, the risk of it being burst in the second half of this year is limited, so there is no need for excessive worry Foreign investors' confidence in Chinese assets has not wavered. Since 2026, foreign institutions' enthusiasm for researching the A-share market has continued to rise. According to Wind data, foreign investors have conducted over 3,700 research visits to A-share listed companies this year. Giants like Goldman Sachs, Bank of America Securities, and JP Morgan have each conducted more than 50 research visits this year. In terms of the industries being researched, these foreign institutions are focusing on technology sectors such as electronic devices, semiconductor equipment, and integrated circuits.

Overall, the adjustment on July 7 was a rational wait by the market ahead of multiple macroeconomic events, rather than a panic exit triggered by a deterioration in fundamentals. The contraction in trading volume, structural differentiation, and performance verification are intertwined, forming a normal transition for the market from "rapid growth" to "slow progress." The safety base of Chinese assets has not weakened, and the attractiveness of valuations is gradually accumulating in a low-interest-rate environment. Investors may consider viewing fluctuations with a more relaxed and long-term perspective; short-term "gear shifts" often serve to build more robust momentum for the next phase