- The main stock indices of the Chinese stock market collectively rebounded and closed higher in early trading on Tuesday. The General Administration of Customs released May's import and export trade data, which significantly exceeded market expectations. The year-on-year growth rate of exports, measured in US dollars, reached a three-month high. The semiconductor sector strengthened across the board, driven by expectations of a strong technology policy and buying interest, leading to a substantial rebound in the STAR Market and ChiNext indices.
- Despite strong macroeconomic data, geopolitical risks resurfaced, limiting the overall market gains. The US government updated its list of Chinese companies accused of assisting the military, including some leading internet and automobile manufacturing giants, raising concerns about the future of Sino-US trade relations. As a result, some heavyweight stocks faced pressure in early trading.
- Institutional analysts expressed cautious attitudes towards the sustainability of this rebound. An investment manager in the fund industry pointed out that recent global market fluctuations are part of a de-crowding trade, and the structural market in popular sectors such as domestic artificial intelligence and storage chips may face revaluation after related companies complete their initial public offerings. Investors need to be wary of marginal changes in the structural bull market.
Trade Surplus and Macro Demand Exceed Expectations
Data disclosed by the General Administration of Customs of China showed that exports in May, measured in US dollars, grew by 19.4% year-on-year, exceeding the previous Reuters survey median estimate of 15%, marking the highest growth rate in nearly three months. Meanwhile, imports in May grew by 27.4% year-on-year, also significantly higher than the market expectation of 25%. The unexpected performance of both import and export data indicates strong stage demand in domestic and foreign markets, providing data support for the stabilization and recovery of the macroeconomy, and directly benefiting the A-share market's early trading rebound today.
Strengthening of Semiconductor Sector and Rebound of Growth Stocks
Driven by adjustments in overseas markets and expectations of domestic industry fundamentals, the semiconductor products and equipment sector performed brilliantly in early trading today. The CSI All Share Semiconductor Products & Equipment Index (H30184:CSI) closed up by 4.2% in the morning session. This led to the SSE STAR 50 Index (000688:SH) closing up by 3%, and the Shenzhen ChiNext Index (399006:SZ) rising by 1.9%. The Shanghai Composite Index (000001:SH) closed up by 0.5% to 3,979.68 points in early trading, and the CSI 300 Index (399300:SH) rose by 0.8%. The technology hard capital sector has once again become the core sector attracting capital inflows.
Resurgence of Geopolitical Frictions Suppresses Blue-Chip Stocks
The uncertainty of the external environment continues to constrain the comprehensive recovery of market risk appetite. On Monday, the US released an updated list of Chinese entities, accusing related companies of assisting the Chinese military, including multinational e-commerce giant Alibaba (BABA:US), internet search service provider Baidu (BIDU:US), and new energy vehicle manufacturer BYD (002594:SZ). This move has intensified tensions in bilateral relations. Affected by this news, BYD's A-shares closed down by 0.6% in early trading, and the valuations of some large Chinese concept stocks and export-oriented heavyweight companies remain under pressure in the short term.
De-Crowding of Chips and Prospects of Structural Bull Market
Regarding the current fluctuations in global asset prices, some public fund investment managers in South China believe that the recent decline in overseas markets is essentially a de-crowding trade, rather than a result of the Federal Reserve's interest rate hikes leading to an economic recession. However, the domestic market's industry competition and involution phenomenon are more prominent, requiring close attention to the risk of an early end to prosperity trading. As companies in sub-sectors such as artificial intelligence and storage chips continue to advance their initial public offerings, if new stock issuance leads to a substantial increase in market capital and chip supply, the existing structural bull market may face challenges in sustaining itself, and the prosperity cycle of some popular sectors may weaken marginally in the future.
