AI entry point improving, balanced by shareholder return plays

Research evidence excerpt

AI entry point improving, balanced by shareholder return plays

Asia Pacific Equity Research

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China/HK First to Market 31 July 2026

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China Equity Strategy, China (Erin Zhang, CFA)

We believe the China equity rebalancingis ongoing across multiple dimensions. A-share margin financing

deleveraging has likely undergone the hardest part, with margin buy as a percentage of A-share turnover

now fluctuating below 9%. However, A-share velocity remains at a 4-5% level in the last few trading days,

suggesting possible further consolidation ahead, as interim lows in bull markets tend to dip around 3-3.5%.

National team ETF purchases have cushioned the market but have not yet signaled a definitive bottom, with

peak single-day inflow size of cRmb30bn yet to match the 8 April 2025 net capital injection of Rmb100bn

(Figure 5 and Figure 6). 14-day RSI of CSI300/STAR50 corrected from 63/75 at end June to 41/38 on 29 Jul

(Figure 1 shows the list of China momentum stocks with latest 14d RSI <40, and MTD 14d RSI correction <-

30). That said, we don’t see imminent risk for the market to derail either. On further liquidity risk with stock

pledged loans, incremental A-share market cap facing liquidation risk would be ≤Rmb100bn (c5% of A-

share daily turnover) for every 5% decline in share prices. On the upcoming IPO pipeline, we see the

possibility of a rising emphasis on shareholder returns by Chinese policy makers in order to strike a balance