Multiple favorable factors are aligning, providing robust support for the stabilization and recovery of the A-share market. In a recent interview, a chief strategy analyst from China Galaxy Securities, Yang Chao, shared his insights on the recent market adjustments and the outlook. He attributed the recent pullback primarily to the transmission of sentiment from external market volatility, while noting that the conditions for a market repair are becoming increasingly mature. From a medium to long-term perspective, the A-share market is underpinned by several positive factors, allowing investors to maintain a rational and optimistic stance.

Convergence of Multiple External Pressures

Regarding the recent volatility in the A-share market, Yang Chao believes the core reason for this round of correction is the concentrated impact of external, imported factors, while the domestic macroeconomic and policy fundamentals have not shifted. "Recently, there have been signs of marginal tightening in overseas monetary policy expectations, with both US Treasury yields and the US dollar index rising simultaneously, exerting systematic pressure on the valuations of global growth assets," Yang stated. He further explained that the simultaneous weakness in the technology sectors of US, Japanese, and South Korean stock markets led to a rapid spillover of panic sentiment along industrial chains, which then transmitted to the A-share market. Northbound capital saw periodic outflows, causing some disturbance to market liquidity expectations. Concurrently, heightened geopolitical uncertainties and fluctuating, rising crude oil prices have significantly increased global risk-aversion sentiment, leading to an overall contraction in risk appetite. Under the combined effect of these multiple external pressures, the A-share market's previously strong sectors like computing power and semiconductors experienced concentrated pullbacks, becoming the main feature of this adjustment.

Market Recovery Conditions Are Maturing

In Yang Chao's view, this round of adjustment constitutes a reasonable and healthy technical correction within the market's normal operation. He believes the current adjustment is already relatively thorough, and conditions for a rebound are gradually accumulating. "This round of correction essentially corrects the excessively rapid rise seen earlier, helping to make the market structure healthier," Yang said. In the first half of the year, the technology theme continued to strengthen, with valuations in some sectors rising rapidly and trading activity becoming increasingly crowded. The market itself had an inherent need for valuation regression and optimization of the shareholding structure. Yang believes that after the recent sustained adjustment, previously accumulated profits have been largely digested, and short-term irrational selling pressure has been essentially released. From a valuation perspective, the valuations of major broad-based indices have fallen to relatively low levels for the year, significantly improving the margin of safety. Furthermore, market leverage risks have been effectively cleared, and mainstream broad-based ETFs have continued to receive capital inflows at low levels, indicating that medium to long-term capital is increasingly recognizing the current market valuation. "Considering both technical indicators and signals from the capital side, the momentum for market sentiment repair is continuously building, and the technical level has already opened up space for a rebound and recovery," Yang added.

A-Share Market Demonstrates Notable Internal Resilience

Looking from a medium to long-term perspective, Yang Chao believes the A-share market exhibits notable internal resilience, with multiple positive factors providing a solid foundation for subsequent market stabilization and recovery. Firstly, the continuous implementation and effectiveness of domestic policies aimed at stabilizing growth and industries, coupled with the steady continuation of the real economy's recovery trend, provide a favorable macro environment for the A-share market. Overall, volatile adjustments are a normal part of capital market operations. This round of pullback represents a healthy self-correction by the market and will not alter the ongoing pattern of structural upward opportunities in A-shares, nor will it shake the long-term upward trend of domestic economic recovery and industrial upgrading. Secondly, positive signals are continuously emerging at the industrial level. Yang specifically mentioned the fruitful outcomes showcased at the recently held 2026 World Artificial Intelligence Conference (WAIC 2026), where multiple cutting-edge AI products debuted, domestic large-scale computing power clusters officially commenced operations, and numerous industrial cooperation projects were signed. These substantive developments continue to solidify the long-term growth logic of the AI industry and also provide room for imagination regarding the subsequent earnings growth of related listed companies. Finally, the continuous delivery of corporate earnings provides solid support for the market. So far, over a thousand A-share listed companies have disclosed mid-year performance forecasts indicating growth, with leading companies in high-growth sectors like AI computing power, storage, and optical communications consistently delivering profits, indicating a solid and positive industrial fundamental picture. Yang Chao suggests that with current market valuations at reasonably low levels, medium to long-term investors can maintain an optimistic outlook, rationally allocate to high-quality sectors with strong earnings certainty, and seize the configuration window presented by the market adjustment.