On July 16th, China's three major stock indices opened collectively lower. The Shanghai Composite Index fell by 1.09%, while the ChiNext Index dropped by 2.48%.

In terms of sector performance, storage chips, semiconductors, CPO (co-packaged optics), optical fiber, and energy metals were among the leading decliners.

Institutional Perspectives on the Market Outlook

Soochow Securities stated that liquidity factors remain the core variable disturbing the market, suggesting a focus on leading stocks with stronger earnings certainty.

Soochow Securities believes the short-term style rebalancing in the A-share market is essentially a liquidity correction triggered by the resonance of internal trading crowding and external market volatility, with no fundamental shift in the underlying industrial logic at present. The institution indicates that until the end of July, when major overseas cloud providers intensively disclose their financial reports and capital expenditure guidance, liquidity factors will continue to be the core variable disturbing the market. Regarding allocation, it is recommended to prioritize leading stocks within the overseas computing power industry chain that possess strong earnings certainty and still offer attractive valuations. Such varieties maintain a favorable risk-reward profile in the medium term, and investors may consider extending their holding periods to mitigate the impact of short-term fluctuations.

Orient Securities noted that the Shanghai Composite Index still has upward momentum, with this week's high expected around the 3970-point level.

Orient Securities stated that influenced by the sentiment spillover from overseas technology stocks, the A-share market has once again entered a phase of intense volatility. Following the weakness in semiconductors, the pharmaceutical sector rose timely. The number of pharmaceutical stocks hitting the daily limit-up or gaining over 10% reached 21, with Joinn Laboratories (China) Co.,Ltd. (SHSE: 603127) opening limit-up. The Innovation Pharmaceuticals ETF surged nearly 6% at one point. A noteworthy phenomenon is that the more volatile the market becomes, the more small-lot funds, typically seen as representing retail investor trading behavior, tend to buy. This suggests that while institutional funds are controlling positions and realizing profits in stages, retail investors have not amplified panic sentiment; instead, they continue to play the role of a market "stabilizer" during adjustments. From a technical analysis perspective, the Shanghai Composite Index still possesses upward momentum, with this week's high expected to be around the 3970-point level.

Founder Securities advises continuing to adopt a balanced approach to cope with high volatility, with a key focus on the independent industrial-logic-driven innovation pharmaceuticals theme.

Founder Securities believes the market's core contradiction remains "overseas sentiment disturbance + internal rotation between high and low positions within themes," rather than a deterioration in domestic fundamentals. The rotation of funds from crowded computing hardware and aerospace/defense sectors to lower-positioned cyclical blue-chips confirms the characteristics of style rebalancing during July's transition from "liquidity-driven" to "earnings-driven" phases. In terms of allocation, it is advised to continue with a balanced approach to manage high volatility: use high-dividend, low-valuation blue-chips as a foundation, focus on the innovation pharmaceuticals theme driven by independent industrial logic, remain cautious towards high-position technology hardware, and wait for opportunities to buy on dips after a stabilization in volume contraction.