China: An Equity Strategist’s Diary: Weekly wrap (13-17 Jul): From rotation to de-risking? AI leadership falters

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China: An Equity Strategist’s Diary: Weekly wrap (13-17 Jul): From rotation to de-risking? AI leadership falters

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China: An Equity Strategist’s Diary

Weekly wrap (13-17 Jul): From rotation to

de-risking? AI leadership falters

Equity Strategy

Weekly index performance 20 July 2026

HSCEI +1.2%/CSI300 -5.3%: Heavy tech selloff (esp. domestic AI hardware) reignited Equity Strategy

concerns on the sustainability of AI-driven market leadership. Despite the magnitude of China

Friday’s correction, subdued A-share daily turnover (below YTD avg) did not show the

type of volume spike typically associated with broad-based liquidation. Key question is Table of Contents

whether the unwind proves a sentiment reset in AI trades or broadens into de-risking.

Indices vs RRR cut 2

Earlier this week, investors rotated into underperforming internet and healthcare names

Key themes update 3

amid spillovers from Korean market volatility, but positioning turned increasingly

defensive as the selloff persisted, with low-beta names (incl. consumer) attracting flows Market movements and capital flows 4

later this week. Recent price actions on positive catalysts and earnings (1H prelim) China Positioning 6

indicated weakening conviction in AI/high-beta stocks. On a positive note, Sunday Earnings revisions 7

statement on renewed national team buying in the past few days could offer a near- Recovery trends 8

term sentiment backstop if weaknesses broaden or intensify. H-shares outperformed A- Key events 9

shares, helped by strength in recent laggards. Real estate, staples and energy Key news 10

outperformed the most while IT, materials and healthcare lagged. Macro wise, sub- China Coverage Universe 21

target 2Q GDP growth (+4.3%) underscored sustained weakness in domestic demand,