GEMS FIRST TO MARKET

研报英文原文证据摘录

GEMS FIRST TO MARKET

Global Equity Research

This material is neither intended to be distributed to Mainland China investors nor to provide securities

investment consultancy services within the territory of Mainland China. This material or any portion hereof

may not be reprinted, sold or redistributed without the written consent of J.P. Morgan.

GEMS First To Market 31 July 2026

Top Stories

China Equity Strategy (Erin Zhang, CFA), China

AI entry point improving, balanced by shareholder return plays

We believe the China equity rebalancing is 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 0, 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