A-shares and Hong Kong stocks joined forces in July to counterattack the stock market, marking a “good start” for the second half of the year. On the first trading day of the second half, the strengthening of the RMB exchange rate against the US dollar helped boost the three major A-share indexes, with the Shanghai Composite Index experiencing its largest single-day increase in two months. The Shanghai Composite Index closed up 1.31% at 3243.98 points, and the turnover of the Shanghai and Shenzhen stock markets exceeded one trillion yuan. The Hong Kong stock market also performed well, with the Hang Seng Index rising by 2.06%.
The rise in the stock market can be attributed to several factors, according to market analysts. The economic stabilization and recovery trend is becoming evident, the RMB exchange rate has strengthened, and the Caixin PMI index has closed above 50 for two consecutive months. Additionally, the market is entering the period of high-dividend payouts for stocks in the 2022 annual report, attracting capital to high-interest strategies.
The theme of new energy vehicles and energy storage made a comeback in the stock market, with many related stocks hitting their daily limit. New energy auto stocks in Hong Kong also saw significant gains. The Ministry of Industry and Information Technology issued “Implementation Opinions on Improving Manufacturing Reliability,” focusing on the development of various automatic driving systems in the automotive industry. New energy car companies, such as Xiaopeng Motors and Weilai Automobile, also reported strong sales in June.
The Producer Price Index (PPI) is expected to rebound significantly in July. CITIC Construction Investment believes that the market has reached its bottom and holds a positive view on the future market. The insurance sector also performed well, with the overall increase reaching 4.63%. Analysts suggest an active layout in the insurance sector, as increased market demand and hot sales of savings insurance contribute to its growth.
Everbright Securities recommends focusing on three directions: the digital economy and AI, directions related to economic recovery, and “China Special Estimation.” Huatai Securities highlights the telecommunications services, energy, and information technology industries as the sectors with the largest gains in Hong Kong stocks this year. CICC Strategy advises investors to adopt a “dumbbell” allocation strategy, focusing on state-owned enterprises with high dividend potential and high-quality growth sectors benefiting from the Fed’s future policy shift.