China Equity Strategy: Policy put emerges after tech sell-off, 2Q earnings catalyst

Research evidence excerpt

China Equity Strategy: Policy put emerges after tech sell-off, 2Q earnings catalyst

Global Markets Strategy

23 July 2026

China Equity Strategy

Policy put emerges after tech sell-off, 2Q earnings

catalyst

Policy put emerges after AI-led deaveraging. The sharp AI-led onshore sell-off Equity Macro Research

has finally triggered a policy response. Over the weekend, China Reform Holding AC Erin Zhang, CFA

and China Chengtong announced Rmb60bn of purchases in onshore equities and

(86-21) 6106 6328

ETFs, while indicating they will continue to add holdings. Notably, tech erin.zhang@jpmorgan.com

companies were explicitly included alongside central SOE stocks and ETFs. Our SAC Registration Number: S1730521090002

ETF flow tracker shows a swift reversal over the past week across both J.P. Morgan Securities (China) Company

benchmark ETFs and AI/tech-focused products such as STAR 50 and STAR Chip Limited

ETFs. Daily A-share buybacks have also recently surged to a YTD high (Figure 1- Tim Huang

Figure 4). Positioning also looks less stretched, with the A-share margin-buy ratio (852) 2800-4323

normalized and, regionally, Korea’s leveraged ETF unwind estimated to be ~75% tim.huang@jpmorgan.com

through. In early July we called for a tactical rotation into non-AI trades, but this J.P. Morgan Securities (Asia Pacific) Limited/

trade may regain traction in late July/early August as solid global earnings J.P. Morgan Broking (Hong Kong) Limited

guidance coincides with a healthier price set-up following the recent deleveraging. Rajiv Batra

Our US equity strategist expects 2Q26 hyperscaler results to continue validating (65) 6882-8151

the AI infrastructure build-out, with upside risk to consensus capex over the next rajiv.j.batra@jpmorgan.com