Zheshang Securities says prior market adjustment pressure is largely released
and a more positive short-term stance is warranted. Large inflows into
mainstream ETFs have driven a clear bottoming rebound, suggesting the short-term
trough is taking shape. Since late June, the ChiNext and STAR Market-led segment
has completed a sizeable correction that has largely discharged internal
adjustment pressure from earlier gains, limiting near-term downside. The
Shanghai Composite has found support near its 20-month moving average and has
the momentum to retest the yearly moving average or the 4,000 level. The ChiNext
index has rebounded above its yearly moving average and shows a relatively
complete five-wave structure on the 60-minute chart; a renewed retest—whether it
makes a new low or not—would complete a bottom and likely precede a rebound on
timeframes above the daily chart (STAR 50 exhibits a similar pattern).
Positioning: sectors already showing recovery include securities, innovative
drugs and Hang Seng Tech—these can be watched on dips from a mid-term
perspective as rebalancing options outside core tech; in the short term,
consider buy-the-dip participation in recent oversold rebounds across ChiNext
and the STAR Market.
