On Friday, August 14, the A-share market faced resistance during a rally, ultimately closing with a slight gain. The market opened higher but pulled back in early trading, finding support near the 3,903-point level. The Shanghai Composite Index steadied and recovered during the afternoon session, moving in a narrow upward range throughout the day.
Sectors showing strength included rare earths, telecommunications equipment, electronic chemicals, and glass fiber, while film exhibition, electric power, utilities, and baijiu underperformed. The ChiNext Board also gained ground, outperforming the main board with a stronger intraday trend.
Currently, the average price-to-earnings (P/E) ratios for the Shanghai Composite Index and the ChiNext Index stand at 17.11 times and 46.72 times, respectively. These levels are above the median of the three-year average, suggesting they are suitable for medium- to long-term allocation. Total trading volume on Friday reached 2.1567 trillion yuan, sitting above the median of the three-year average daily volume.
The July Politburo meeting clearly emphasized "increasing counter-cyclical adjustment efforts," focusing on leveraging existing policies and formulating new ones, with expanding domestic demand and "artificial intelligence+" as key directions. The People's Bank of China conducted a 500 billion yuan reverse repurchase operation on August 5, with a net injection of 200 billion yuan, signaling a clear intention to stabilize the market. The China Securities Regulatory Commission released 10 measures to deepen capital market cooperation between the mainland and Hong Kong, and the first batch of ChiNext computing power ETFs was filed, with policy dividends continuing to be released.
However, the July manufacturing PMI fell to 49.2%, slipping back below the contraction threshold, indicating the foundation for economic recovery remains fragile. This has strengthened market expectations for additional incremental policies in the third quarter. The Shanghai Composite Index is expected to continue its consolidation pattern, with structural rebalancing being the core characteristic.
Investors should closely monitor macroeconomic data, overseas liquidity changes, and policy developments. In the short term, attention may be directed toward opportunities in the telecommunications equipment, rare earth, electronic chemicals, and glass fiber sectors.
Risk Factors: The risk of an overseas recession exceeding expectations could impact the domestic economic recovery process. Domestic policy implementation and the pace of economic recovery may fall short of expectations. Macroeconomic conditions could be disrupted by unexpected factors. Policies may undergo unexpected changes. International relations could alter the economic environment. Overseas macro liquidity might tighten more than anticipated. Global market volatility could increase.