China Weekly Wrap: Markets, Macro & Tech – Key Developments This Week
a week that was 22-27 June 2025
Good Morning,
This week, we launched our China Healthcare coverage, starting with:
Policy-Driven Transformation (Published early in the week): A macro and regulatory overview of key reforms, demographics, and system design, outlining sector winners and losers without delving into valuations.
Innovation & Global Competition (Published yesterday): Biotech pipelines, cross-border licensing, AI integration, and China’s push into global medtech and health exports.
Next week, we’ll continue with:
Innovation Leaders vs. Traditional Players: Comparing company models, SOE vs POE dynamics, and capital efficiency.
Sub-Sector Deep Dives: A bottom-up look at hospitals, diagnostics & devices, pharma & biotech, digital health, and insurance/payment.
These articles are all mostly paywalled so do sign up to the premium section of the stack to get access.
Also next week, look out for the return of our Portfolio Review for the premium members, It;s now a monthly feature (with separate updates for nay portfolio acitons), providing deeper insight into strategy, positioning, and performance drivers. Make sure you’re signed up to receive it as soon as it’s out.
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Nothing in this Substack is Investment Advice. This information is provided for informational purposes only and does not constitute financial, investment, or other advice. Any examples used are for illustrative purposes only and do not reflect actual recommendations. Please consult a licensed financial advisor or conduct your own research before making any investment decisions. The authors, publishers, and affiliates of this content do not guarantee the accuracy, completeness, or suitability of the information and are not responsible for any losses, damages, or actions taken based on this information. Past performance is not indicative of future results.
📊 Weekly Relative Performance Observations
Week of June 22–28, 2025
Broad Takeaway
Chinese equities posted a strong week of gains, with Hong Kong leading regional performance and A-shares extending their stabilisation trend. The Hang Seng Index rose +3.2%, driven by tech and property strength, while the HS Tech Index gained +4.1%, continuing its rebound from recent profit-taking. On the mainland, the CSI 300 climbed +2.0%and the Shanghai Composite advanced +1.9%, marking a second consecutive week of recovery.
Policy catalysts remained incremental rather than transformational, but improving FX stability, expectations of additional targeted easing, and resilient domestic data underpinned sentiment. The market mood shifted from defensive caution to cautious optimism, with investors re-entering growth and policy beneficiary sectors. Volatility compressed sharply, and turnover was robust, suggesting renewed conviction to position ahead of mid-year economic signals.
🇨🇳 Performance in Chinese Equities
Shanghai Composite (SHCOMP): 3,424.23, +1.91%
The SHCOMP rose steadily, underpinned by SOEs, industrials, and defensive cyclicals. While volumes were moderate, market breadth was healthy, indicating broad participation. Investors remain hesitant to chase aggressively but are rotating back into sectors with earnings visibility and policy tailwinds.
CSI 300 (SHSZ300): 3,921.76, +1.95%
Large-cap A-shares outperformed in a flow-driven rally, led by financials, industrials, and selected consumer names. PBOC liquidity management and stable CNY rates supported broader sentiment, with foreign institutional flows modestly positive.
ChiNext Index (CHINEXT): 2,124.34, +5.69%
ChiNext posted a sharp rebound, driven by biotech, digital health, and automation stocks. Growth names benefitted from the broader risk-on tone and anticipation of upcoming sectoral support measures. The index remains a barometer of domestic retail sentiment, and this week’s rally suggests confidence is gradually rebuilding.
🇭🇰 Performance in Hong Kong Equities
Hang Seng Index (HSI): 24,284.15, +3.20%
The HSI delivered a strong performance with broad-based gains across tech, property, and Chinese consumer plays. Southbound flows remained supportive, and while the index retains a +21% YTD lead, investors are watching upcoming economic data and global policy signals to sustain momentum.
HS Tech Index: 5,341.43, +4.06%
Tech led the charge in Hong Kong, with internet, AI platforms, and EV-related hardware stocks outperforming. Meituan, Tencent, and EV ecosystem players rebounded strongly as investors rotated back into growth following recent consolidation.
HSCEI (China Enterprises Index): 8,762.47, +2.76%
The China Enterprises Index gained on SOE and insurer strength, reflecting improved mainland sentiment and tactical buying in value-heavy segments. Flows remain dominant over fundamentals, but valuation attractiveness continues to support buying.
HS Red Chips: 4,066.73, +1.06%
Infrastructure and quasi-SOE names saw modest rotational inflows, underlining a balanced investor appetite for defensives alongside growth sectors.
VHSI (Volatility Index): 20.38, -4.99%
Volatility fell sharply as traders unwound hedges amid improved market tone and reduced event risk into quarter-end. Positioning remains cautious but is gradually rebuilding directional bets.
💡 Takeaways for Chinese Equities in a Regional Context
China’s equities regain momentum
The recovery remains flow-driven rather than fundamental, but incremental policy signals and FX stability are supporting sentiment.
Hong Kong leads regional gains
The HSI outperformed most Asian peers this week, reflecting its high-beta rebound characteristics. Investors remain watchful of positioning risks but continue to buy dips tactically.
Growth sentiment improves
ChiNext’s rally shows retail appetite returning to high-beta sectors, especially biotech and automation. This could provide near-term support if macro data remain stable.
Asia’s divergence narrows
While Taiwan’s AI-driven rally continues, China’s stabilisation has narrowed performance gaps. Positioning is shifting from defensives back towards growth and policy beneficiaries.
🌏 Regional Peers – Weekly Performance
🇯🇵 TOPIX: +2.32%
Japanese equities rallied after the BoJ kept policy steady, boosting exporter and industrial sector sentiment. Volume turned supportive, though currency volatility remains a watchpoint .
🇹🇼 FTSE TWSE Taiwan 50: +0.90%
Taiwan maintained its strong position amidst AI-driven demand, with TSMC and semiconductor suppliers continuing to attract foreign inflows. Markets responded well despite signs of investor hesitancy .
🇹🇷 BIST 100 (Turkey): +2.18%
Turkey’s benchmark recovered from prior outflows as traders repositioned around easing FX pressure and central bank signals. Still, macro-political uncertainty persists .
🇮🇳 NIFTY 50: +2.09%
India extended its post-election rally, supported by strong domestic flows into banks, PSUs, and infrastructure stocks amidst clarity on budget direction .
🇵🇭 Philippines PSEi: +0.60%
The PSEi edged up, led by financials and selective consumer sectors, amid mixed economic data. Investors are looking ahead to possible policy maneuvers in H2.
🇮🇩 FTSE Indonesia: +0.30%
Indonesia traded flat as banking held steady but commodity-linked names lagged. The market remains cautious amid ongoing political and fiscal calibration .
🇦🇺 ASX 200: +0.10%
Australia’s benchmark was broadly unchanged. Weakness in materials and energy offset modest gains in banks and staples, as investors awaited clearer direction on China and commodity trajectories .
💡 Key Observations for Asia
China outperformed most regional peers this week, with both A-shares and Hong Kong posting stronger gains than Japan, Taiwan, India, or Southeast Asia. Improved FX stability and incremental policy optimism underpinned the rebound.
Asia’s tech leadership remains anchored in Taiwan and Korea, but China’s growth sectors – especially ChiNext biotech, automation, and digital health – outpaced Taiwan semiconductors this week, indicating a tactical reallocation into Chinese growth.
Japan’s recovery remains currency-dependent, with exporter sentiment still sensitive to yen swings despite policy stability.
India continues its resilient run, driven by strong domestic flows and political stability. While China’s weekly gains were larger, India remains more consistent on a multi-week trend basis with firmer structural conviction among global allocators.
Southeast Asia saw muted gains, reflecting its lower beta to global tech trends and softer commodity-linked performance, especially in Indonesia and Australia.
Overall, Asia enjoyed a broadly positive week, but China’s outperformance stood out after recent underperformance. Investors are cautiously re-engaging tactically with Chinese equities while maintaining core overweight positions in India and Taiwan, and a balanced exposure to Japan’s industrial upcycle.
📰 In the News This Week
📜 NPC Standing Committee — 16th Session Update
Dates: June 24–27, 2025
This week, the NPC Standing Committee convened its 16th session, passing several legislative changes, personnel appointments, and approvals:
Revised Laws Passed:
Public Security Administrative Penalty Law & Anti‑Unfair Competition Law passed after third reading, tightening administrative penalties and enforcement for emerging violations .
The Amendment on Penalties for Public Security Administration increases oversight and penalties for new urban risks .
International Mediation Convention Approved:
China ratified the Convention on the Establishment of an International Mediation Centre, signed in Hong Kong, reinforcing China’s role in international dispute resolution .
2024 Central Government Final Accounts:
The Committee approved the final audit of the 2024 budget, reflecting continued efforts for fiscal transparency and accountability .
High-Level Personnel Changes:
Miao Hua (Military Commission member) was removed from his post .
Also accepted Wu Zeng’s resignation and approved additional NPCSC membership adjustments.
This Indicates:
Regulatory tightening: The new laws underscore a legislative ramp-up to manage evolving social, market, and digital-related risks via administrative penalties and competition oversight.
Judicial diplomacy: Approving the International Mediation Convention highlights China’s growing global dispute-resolution ambitions and soft power in legal diplomacy.
Fiscal discipline: Finalizing the 2024 accounts signals institutional consolidation of budget transparency, in line with calls for fiscal reform.
Strategic reshuffling: High-level personnel updates reflect ongoing internal alignment within China’s governance apparatus, possibly marking important military or political shifts.
🏦 PBOC Vows Targeted Easing
Announced by: People’s Bank of China | Date: June 27
China’s central bank committed to speeding up and intensifying forward‑looking, targeted easing, including reserve ratio cuts, rate reduction, and liquidity injections—aimed at stabilizing the yuan, lowering financing costs, and supporting the property sector ahead of the July Politburo meeting .
Interpretation: A strategic pivot toward calibrated stimulus—addressing growth slowdowns without triggering asset bubbles—setting the stage for likely rate cuts or RRR adjustments later this summer.
💳 Push to Boost Domestic Consumption
Announced by: PBOC & government bodies | Date: June 25
Six ministries released guidelines deploying 500 bn yuan of relending funds for sectors such as elder care, catering, and education. The initiative includes consumer-focused ETFs, bonds, and REITs to strengthen household demand .
Interpretation: Reinforces China’s “dual circulation” strategy, signaling systemic shifts toward a consumer-drivengrowth model with backing from state finance and credit policy.
🔁 Additional Liquidity Injection
Announced by: PBOC | Date: June 16 (executed this week)
The central bank injected 400 bn yuan via six‑month reverse repos—the second major such move this month—to relieve bond market funding pressure and stabilize rates during heavy issuance periods (4 tn yuan maturing CDs) .
Interpretation: Reflects PBOC’s tactical liquidity management—balancing support for credit markets without fueling yield-driven asset overheating.
🧳 Premier Backs Consumer-Led Growth
Spoken by: Premier Li Qiang | Date: June 26
Premier Li reaffirmed the ~5 % 2025 GDP target and emphasized accelerating consumption-led economic transition, forecasting China remains a major global growth engine .
Interpretation: Political alignment across leadership levels around a domestic-demand orientation, reinforcing policy signals to bolster household spending engines.
💡 True Light Capital Gains China PE License
Announced by: AMAC | Date: June 23
Temasek’s fully owned True Light Capital received a private equity license from AMAC, enabling it to raise RMB funds onshore in China. The firm had raised USD 3.3bn in Sept 2023 for Greater China investments.
This Indicates: Reflects continued foreign institutional interest in China’s private markets despite macro uncertainty, and regulatory openness to reputable strategic capital.
🌍 US-China Trade Deal Hopes
Spoken by: Graham Allison (ex-US official) | Date: June 27
Allison stated that a US-China trade deal MOU could come as early as next week, with both sides motivated to stabilise ties amid economic and geopolitical risks.
This Indicates: A potential de-escalation in trade tensions, though details remain fluid and any deal is likely to be partial.
🇨🇳 China Diplomacy Watch – Victor Gao Suggests Inviting Trump
Announced by: Victor Gao (高志凯), Vice President at CCG
Date: June 27, 2025
Source: Guancha.cn
Summary:
Victor Gao proposed that China should invite former US President Donald Trump to attend the upcoming September 3rd military parade commemorating the end of WWII. He argued that this would be beneficial both for US-China relations and for Trump’s standing domestically.
This Indicates:
A notable soft-power overture from influential policy voices within China, signalling willingness to engage across the US political spectrum.
Guancha’s publication suggests that nationalist-leaning media are open to strategic pragmatism ahead of US elections.
While purely a proposal, it highlights Beijing’s desire to manage bilateral tensions through symbolic diplomacy, potentially hedging its bets on future US political outcomes.
🚗 China Launches 2025 NEV Consumption Campaign
Announced by: Ministry of Industry & Information Technology | Date: June 24
A new campaign will expand NEV (new energy vehicle) consumption in counties and towns from July to December 2025, including promotion of used EV transactions.
This Indicates: Reinforces Beijing’s priority to stabilise and expand NEV demand beyond Tier 1–2 cities, supporting supply chain utilisation and employment.
🛢️ Copper Market Tightens Amid Falling Chinese Stocks
Reported by: Goldman Sachs | Date: June 26
Copper prices rose for a fifth day as Goldman forecast a peak around $10,050/ton in August on tightening supplies, falling Chinese warehouse stocks (-19.1% w/w), and strong US and China demand.
This Indicates: Signals short-term bullish momentum for copper, with inventories drawing down rapidly. However, US tariffs could reduce demand later in the year.
🌐 Xi Seeks Middle East De‑escalation
Announced by: Pres. Xi Jinping | Date: June 17–22 (reemerged this week)
Xi reiterated calls for an early ceasefire and protection of civilians, condemning recent violence in Israel-Iran tensions, and offered China’s diplomatic support ().
Interpretation: Strengthens China’s global diplomatic positioning, signaling Beijing’s intent to be seen as a stabilizer amid global geopolitical volatility.
🌍 Treaty Deepens Central Asia Ties
Announced by: Pres. Xi Jinping | Date: June 16–20 (formal release this week)
At the Astana summit, Xi signed a “permanent good‑neighbourliness” treaty with five Central Asian states, including commitments on energy, infrastructure, customs, and a 1.5 bn yuan aid package .
Interpretation: Markedly expands China’s regional diplomacy, reinforcing Belt & Road influence as Western alignments shift and energy competition intensifies.
📈 Citi Raises China 2025 Growth Forecast
Announced by: Citi Research | Date: June 26
Citi upgraded its China 2025 GDP growth forecast to 5.0% (from 4.7%), citing stabilising domestic demand, targeted policy easing, and incremental external tailwinds.
This Indicates:
A belated catch-up by street consensus to what Panda Perspectives has maintained from the start of the year: a 5.0–5.2% growth outlook anchored in pragmatic policy support and a consumption-led stabilisation. While upgrades are positive for sentiment, the real debate now is whether structural drags (property, local government debt) will cap upside beyond baseline recovery expectations.
💡 Strategic Implications
Policy mix continues to evolve: PBOC’s dual approach—macro liquidity and micro-targeted credit—underscores a balancing act between growth support and risk containment.
Consumption structurally central: With relending facilities and Premier messaging focused on boosting household demand, officials are signaling real commitment to economic rebalancing.
Global outreach is active: Xi’s diplomatic engagements—from the Middle East to Central Asia—underscore China’s soft-power ambitions and strategic diversification beyond traditional Western alliances.
Technocratic coordination: Messaging from PBOC, Premier Li, and guiding documents together reflect a highly coordinated policy front aimed at reinforcing economic stability and boosting domestic demand through non-rate-driven measures.
📊
Macro Data Review
It was a moderately busy data week in China, headlined by disappointing industrial profit data, stable current account numbers, and continued signals of tight metal inventories. The macro tone remains cautiously neutral: profits data confirmed ongoing corporate margin pressures, while external balances remain resilient. Forward momentum is fragile, with no major catalyst to shift the narrative yet.
🏭 Industrial Profits & SOE Performance (Jan-May YTD)
Overall Industrial Profits: -1.1% y/y
(Consensus: +1.5% | Previous: +1.4%)
SOE Operating Revenue: -0.1% y/y
SOE Total Profits: -2.8% y/y
This Indicates:
China’s industrial and state-owned enterprise sectors continue to face broad-based profitability pressures. The sharp downside surprise in industrial profits highlights deteriorating margins across manufacturing and midstream sectors, driven by a combination of weak pricing power, subdued domestic demand in traditional sectors, and elevated input costs.
For SOEs specifically, flat revenue and a deeper drop in profits underscore inefficiency challenges and structural headwinds. Upstream SOEs remain exposed to softer commodity-linked revenue, while midstream industrial SOEs are caught between input price volatility and limited downstream pass-through. Despite targeted policy easing and credit support, the data reveals that profitability recovery is fragile and uneven, with limited signs of margin expansion outside select high-tech manufacturing segments.
Overall, these figures reinforce the message that while headline macro growth remains stable, corporate cashflows and returns on capital are under persistent strain, raising questions around the sustainability of capex plans and industrial upgrading without more aggressive structural reforms or profit margin relief.
💰 Current Account (Q1 Final)
Actual: USD +165.4 billion
Previous: USD +163.8 billion
Consensus: USD +165.6 billion
This Indicates:
China’s external balance remains solid, driven by a resilient goods surplus despite softer global demand. While the services deficit persists, tourism outflows remain limited relative to pre-pandemic levels. The current account stability provides FX reserve support and policy breathing room, though it is unlikely to materially shift macro policy direction in the near term.
🏗️ SHFE Weekly Warehouse Stocks (Ending June 27)
Copper: -19,264 tonnes (-19.1%)
Aluminum: -10,194 tonnes (-9.8%)
Zinc: +769 tonnes (+1.8%)
Lead: +638 tonnes (+1.2%)
Nickel: -586 tonnes (-2.3%)
Tin: -10 tonnes (-0.1%)
Rubber: +2,206 tonnes (+1.0%)
This Indicates:
Another week of sharp copper and aluminium inventory drawdowns, reinforcing tight spot market conditions amid strong domestic consumption and export demand. Rising zinc and lead inventories suggest stabilising demand-supply dynamics in those markets. The divergence highlights sectoral differences in China’s industrial recovery trajectory and implies supportive near-term pricing for copper and aluminium.
💡 Overall Macro Picture
The industrial sector remains under profit pressure, highlighting the limits of China’s current recovery.
External balances are stable, providing FX and policy room to maneuver.
Metals data continue to tighten, suggesting ongoing industrial consumption strength in select areas.
Policymakers will likely maintain targeted easing and incremental stimulus to stabilise momentum, with July’s Politburo meeting as the next key catalyst for broader economic guidance.
🏢 Company News & Results
🛒
Alibaba BABA 0.00%↑ Annual Report & Chairman’s Letter Highlights
Date: June 26
Alibaba’s FY25 annual report and Chairman Joe Tsai & CEO Eddie Wu’s letter outlined a clear strategic pivot:
🔹 Strategic Focus
Reiterated “User First, AI-Driven” as the group-wide strategy.
Doubling down on two core engines: E-commerce + AI & Cloud, positioning AI as the defining technology for the next decade.
🔹 AI & Cloud Growth
Public cloud revenue accelerated; AI-related products posted triple-digit growth for seven straight quarters.
Over 200 Qwen family models open-sourced, with more than 300 million global downloads and 100,000 derivative models created, making Qwen the world’s largest open-source model family.
🔹 Capital Management
FY25 dividends total US$4.6 billion.
Completed US$11.9 billion share buyback, reducing outstanding shares by 5.1% and driving EPS accretion.
Divested non-core assets like Sun Art and Intime, focusing capital on core businesses and AI infrastructure.
🔹 Future Vision & Investments
Plans to invest more in the next three years into AI + Cloud than the total of the past decade, scaling cloud computing infrastructure, foundation models, and AI-native applications.
Framing AI as Alibaba’s “second growth curve”, alongside e-commerce.
Emphasised adopting a startup mindset, embracing risk-taking and innovation with the ambition to lead in AGI development.
This Indicates:
Alibaba is pursuing an aggressive pivot towards AI as its central strategic and growth narrative, while delivering strong shareholder returns via buybacks and dividends. The message underscores confidence in leveraging its cloud scale to drive AI adoption across Chinese enterprises and global markets, aiming to restore investor conviction in its growth trajectory.
🚗 Xiaomi – Record-breaking EV Launch for YU7
Date: June 26–27, 2025
Xiaomi officially launched its YU7 electric SUV, achieving a historic debut:
289,000 pre-orders within the first hour of launch.
200,000 pre-orders secured in just 3 minutes.
Over 240,000 converted to firm orders within 18 hours, marking one of the fastest EV order conversions on record.
Model Lineup & Key Specs
Xiaomi YU7 Standard
Price: RMB 253,500
Motor: Single motor, 835 km CLTC range
Battery: ~96.3 kWh
Features: Core intelligent driving functions, Nvidia Thor platform for computing, strong smart cockpit integration.
Xiaomi YU7 Pro
Price: RMB 279,900
Motor: Single motor, 770 km CLTC range
Battery: ~96.3 kWh
Features: Enhanced configurations, higher spec cabin and infotainment suite.
Xiaomi YU7 Max
Price: RMB 329,900
Motor: Dual motor AWD, 760 km CLTC range
Battery: ~101.7 kWh, 3.23s 0–100 km/h acceleration
Features: Flagship variant with high-performance drive system, Nvidia Thor platform, and advanced autonomous driving hardware stack.
This Indicates:
The exceptionally high pre-order conversion rate confirms strong genuine consumer demand, validating Xiaomi’s strategic entry into EVs.
Aggressive pricing (~4% below Tesla Model Y), advanced AI integration, and seamless ecosystem compatibility resonated strongly with consumers.
Market impact is clear: Xiaomi shares surged ~8% intraday post-launch, while competitors including Tesla now face intensified price and tech competition in China.
🚗 BYD Cuts Production at Multiple Factories
Date: June 25
Sources reported BYD has begun cutting vehicle production at some factories by cancelling night shifts, with reductions of at least one-third of capacity at four plants. It has also suspended plans for new production lines.
This Indicates:
Potential signals of inventory build-up, slower domestic NEV demand growth, or tactical production adjustmentsamid intensifying price competition. However, these reports are unconfirmed; BYD has not issued an official announcement. At Panda Perspectives, we will monitor developments closely and plan a full NEV sector review in July to assess market share, inventory, and pricing dynamics in light of these potential capacity cuts.
🛍️ Shein Preparing Hong Kong IPO Filing
Date: June 27
Shein is reportedly preparing to file confidentially for a Hong Kong IPO as early as Monday, marking a rare strategic shift after long pursuing a US listing. Sources suggest the fast-fashion giant still wants to keep its US IPO option open if geopolitical conditions improve.
🔹 Key Details:
The IPO could value Shein at $45–60 billion, though market conditions will influence final pricing.
Filing confidentially in Hong Kong allows Shein to keep sensitive financials private while complying with local listing rules.
Shein is also in discussions to transfer its headquarters to Singapore to mitigate China domicile risk and ease cross-border operational complexity.
This Indicates:
Shein is adapting its listing strategy amid intense US regulatory scrutiny over labour practices, supply chains, and data security, while needing fresh capital to fund its global logistics integration, marketplace expansion, and private-label verticals. Hong Kong offers geopolitical insulation yet retains strong capital market depth for such a mega-IPO.
For investors, this will be a major litmus test of global investor appetite for China-linked consumer growth stories in the current macro environment.
💡 Editorial Note:
Shein’s pivot underlines the pragmatic flexibility of China’s leading private consumer platforms as they navigate rising geopolitical, regulatory, and competitive challenges while pursuing aggressive global expansion.
🏗️ China Railway Group Wins Major Infrastructure Contracts
Date: June 26
China Railway Group announced it won multiple large-scale construction contracts worth a total of RMB 58.7 billion, covering municipal, rail, and overseas engineering projects.
This Indicates:
Continued policy-driven infrastructure support and strong order book visibility, reinforcing China Railway’s position as a key beneficiary of fiscal stimulus and domestic infrastructure investment cycles.
Complete Index Performance List:
🧭 General Trends
Chinese equities delivered a broadly positive and rotational week. Onshore markets edged higher, supported by AI, SME innovation, and ChiNext strength, while Hong Kong saw gains concentrated in tech, financials, and consumer names. Real estate stabilised, though underlying sales data remains mixed.
Investor tone remains cautiously constructive. Macro data (industrial profits, current account) was neutral, while policy announcements, including local government debt audits and AI chip licensing reforms, helped sentiment. Sector rotation rather than fresh inflows continues to define price action.
📈 Mainland Indices: Recovery Led by Growth & Innovation
Shanghai Composite (SSE): +1.91%
CSI 300: +1.95%
ChiNext: +5.69%
Shenzhen 100: +2.70%
SSE SME Innovation: +5.75% (best performer)
SSE Commodity Equity Index: +1.37%
SSE Conglomerate Index: +1.82%
🔍 Interpretation: Mainland markets rebounded strongly, led by SME innovation and ChiNext indices, which rose nearly +6%. AI, medtech, and semiconductor names were key drivers, while SOEs and large-cap financials saw stable, modest gains. The rally suggests a return of risk appetite among domestic funds, supported by expectations of policy follow-through post-NPC Standing Committee meetings.
📈 Offshore Indices: Broad-Based Gains with Tech Leadership
Hang Seng Index (HSI): +3.20%
HS Tech: +4.06%
HSCEI (China Enterprises): +2.76%
HSI Financials: +4.03%
HSI Property: +3.62%
HSI Industrials: +2.85%
VHSI (Volatility): -4.99%
🔍 Interpretation: Hong Kong markets posted one of their strongest weeks in recent months, led by large-cap tech (Tencent, Meituan), financials (banks, insurers), and property developers. Volatility declined notably, suggesting increased confidence among institutional investors. The property sector benefited from optimism around incremental mortgage loosening.
🧪 Sector & Style Trends
🚗 EVs & Autos: Xiaomi Dominates Headlines Amid Mixed Moves
BYD Co. (1211.HK): -1.27%
Geely Auto (0175.HK): -1.24%
Xiaomi-W (1810.HK): +7.79%
Li Auto-W (2015.HK): +8.43%
Comment:
The sector was dominated by Xiaomi’s record-breaking YU7 launch, with over 289,000 pre-orders in an hour and 240,000 confirmed orders within 18 hours, marking perhaps the most successful Chinese car launch in history. Xiaomi shares surged nearly +8% on the announcement, underscoring strong investor belief in its smart EV strategy.
BYD shares dipped slightly amid unconfirmed production cut rumours, suggesting investor caution around volume growth sustainability despite its market leadership. Li Auto outperformed on continued delivery strength and resolution of recall concerns, while Geely was flat, reflecting muted sentiment despite steady fundamentals.
Strategic Takeaway: Xiaomi’s entry intensifies competitive pressures across the EV value chain. Investors remain wary of overcapacity risks, and a full NEV sector review is planned for July to evaluate volume, pricing power, and market share shifts post-Xiaomi launch.
💊 Biotech & Healthcare: Robust Rebound in Innovation Names
Wuxi Bio (2269.HK): +4.36%
Hansoh Pharma (3692.HK): +3.93%
Sino Biopharm (1177.HK): +6.21%
Ali Health (0241.HK): +12.24%
Comment:
Healthcare saw broad-based gains as investor rotation returned to innovation sectors. Ali Health led with a +12% surge following platform integration and improved policy signals on digital health reimbursement frameworks. CRO and biotech names rebounded on bargain hunting after recent underperformance, with sector flows suggesting renewed institutional confidence in policy-backed growth segments.
🏦 Financials & SOEs: Quiet Strength Amid Stable Yields
China Life (2628.HK): +2.05%
Ping An (2318.HK): +0.94%
ICBC (1398.HK): +1.94%
China Mobile (0941.HK): -0.06%
Comment:
Life insurers posted solid gains amid stable long-bond yields and benign regulatory headlines. Banks saw mild inflows on expectations of steady net interest margin (NIM) performance despite macro caution. Telecoms paused after strong YTD runs, with China Mobile flat. Overall, SOE-linked names continue to benefit from the “policy safety premium” as investors seek defensive exposures.
🏘 Property & REITs: Momentum Rebuilds with Policy Tailwinds
China Resources Mixc (1209.HK): +0.64%
Henderson Land (0012.HK): +2.05%
China Overseas (0688.HK): +5.39%
HSI Property Index: +3.62%
Comment:
Property developers rose on optimism over incremental mortgage rate tweaks and funding stabilisation measures. China Overseas outperformed on strong buying interest, while Mixc was flat after recent outperformance. Although sales remain fragile, the sector’s recent policy-driven rebound suggests positioning is shifting from defensive caution to selective tactical optimism.
🥤 Consumer & Staples: Rebound Led by F&B Giants
Nongfu Spring (9633.HK): +5.09%
Haidilao (6862.HK): +4.41%
CR Beer (0291.HK): +3.13%
Tingyi (0322.HK): +0.06%
Comment:
The consumer sector saw bifurcation: Nongfu Spring gained strongly on defensive brand leadership and robust pricing power, while Haidilao and CR Beer rebounded as discretionary flows recovered from recent weakness. Tingyi was flat, reflecting cautious consumer staples sentiment amid subdued household consumption data.
Strategic Takeaway:
Investor appetite is rotating back into quality discretionary names with market leadership and margin defensibility, while staples remain a cautious hold rather than a growth allocation.
⚖️ Bottom Line
This week saw Chinese equities rebound decisively, powered by a convergence of policy reassurance, blockbuster corporate events, and renewed investor optimism. Xiaomi’s record-breaking EV launch was more than a headline – it demonstrated genuine consumer spending power and market appetite for credible growth stories. Policy signals turned more supportive, with the PBOC pledging targeted easing and ministries unveiling a RMB 500bn consumption credit package, validating the government’s pivot to household-led growth.
Citi’s upgrade to 5.0% GDP growth echoed what we at Panda Perspectives have held all year: baseline stabilisation is intact, even if structural challenges remain. Meanwhile, Shein’s Hong Kong IPO filing and Alibaba’s AI-first strategy underscored that China’s corporate champions are actively adapting to both geopolitical realities and technological shifts.
Sector performance reflected this cautious optimism. Investors rotated back into AI, biotech, and high-quality financials, property stabilised on incremental mortgage easing, and copper inventories collapsed, signalling real industrial demand. Yet, flows remain tactical rather than conviction-led.
China’s markets are not euphoric, but this week marked a shift from drift to purposeful positioning ahead of July’s Politburo meeting, with policy, corporate execution, and consumer resilience emerging as the key pillars of near-term confidence.
Regards,
Leonid