China A-share W&W Indicator - Monthly: The W&W Indicator softens to neutral in Jul

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China A-share W&W Indicator - Monthly: The W&W Indicator softens to neutral in Jul

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China A-share W&W Indicator - Monthly

The W&W Indicator softens to neutral in

Jul

Equity Strategy

Indicator eased back to neutral zone in Jul 24 July 2026

BofA’s China A-share Wax & Wane Indicator bottomed on Jun 24th at 16, signaling “very Equity Strategy

bullish” on the market, but deteriorated over the past month. The monthly average rose China

from 38 in June to 41 in July, while the weekly average was slightly higher at 48, both in

the neutral zone. Earnings revision is positive, liquidity is ample, while valuation remains

elevated. However, fund flow weakened from “very supportive” to neutral, while leverage

and positioning also eased to the neutral zone. Recent AI-led weakness dragged on

global market performance over the past month. Within China, HSI, HSCEI, and MSCI

China outperformed the most while CSI1000, ChiNext, and CSI500 lagged. Sentiment

became more fragile amid inflation and liquidity concerns. We continue to view China as

a stock pickers’ market. We maintain our barbell strategy, favoring value/yield, as well as

sectors with strong earnings support and R.E.A.L. moats (see 3Q26 outlook). Winnie Wu >>

Research Analyst

Leverage: 46%, neutral. Margin trading as a % of A-share daily turnover drops to 8.7% Merrill Lynch (Hong Kong) +852 3508 3058

in Jul-26 from elevated levels and fell below its long-term average of 9.0%. winnie.wu@bofa.com

Valuation: 72%, high. P/E at 22.4x is above its long-term average of 21.2x. Patrick Pan, CFA >> Strategist

Positioning: 59%, neutral. Stock mutual fund positioning falls to 86.6% in Jul-26 amid Merrill+852 3508Lynch4601(Hong Kong)

market volatility, though still above the long-term average of 84.8%.