Non-Bank Financials - China: Tech leadership now, broader participation later?

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Non-Bank Financials - China: Tech leadership now, broader participation later?

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Non-Bank Financials - China

Tech leadership now, broader participation

later?

Industry Overview

Weak performance of NBFIs in the tech-led rally 22 June 2026

Last week, ChiNext index, mainly growth stocks, in China rose by 11.0% WoW while the Equity

more comprehensive index SHCOMP rose by 1.5% only. Market divergence trends were China

further confirmed when China enhanced its capital market focuses on tech sectors, Non-Bank Financials

based on the talk that market regulators delivered in Shanghai last Wed. Financial Michael Li >>

sectors, both A-share and H-share banks and insurers, reported 5-7% WoW decline, Research Analyst

underperforming the major indices. As we mentioned in our report in Nov 2025, based Merrill+852 3508Lynch7381(Hong Kong)

on the previous tech-led rallies, we believe 1) If the rally is thematic in nature, only a few m.li@bofa.com

insurers and brokers could outperform, while most names cannot; 2) during the rally, Susie Liu, CFA >>

Research Analyst

NBFIs tends to usually outperform when the market is weak and rotation happens; 3) an Merrill Lynch (Hong Kong)

NBFI sector re-rating, except for that in the beginning of the rally, could likely be the +852 3508 8456

susie.liu@bofa.com

signal indicating a potential end of the rally.

Technology continues to dominate market activity NBFI: Non-Bank Financial Institution

Market turnover trends indicate a continued concentration of investor activity in the

technology sector. The tech sector turnover accounted for 46% of the total in the past 4

weeks, compared with 32% in Jan-Feb, followed by Industrial (19%) and material (16%).

All the other sectors only accounted for 19% of the total turnover in the past 4 weeks,