The first trading day of July saw the Shanghai Composite Index rise strongly, driven by sectors like banking and electric power. By the close, the Shanghai Composite was up 0.39% at 3457.75 points, while the Shenzhen Component Index edged up 0.11% to 10476.29 points. The ChiNext Index fell 0.24% to 2147.92 points, and the Beijing Stock Exchange 50 Index gained 0.68%. Combined turnover across the Shanghai, Shenzhen, and Beijing exchanges totaled 1496.8 billion yuan, down about 20 billion yuan from the previous session. Sector-wise, brewing, securities, and real estate declined, while pharmaceuticals, electric power, and banking saw strong gains. Non-ferrous metals, steel, and chemicals also advanced, with innovative drugs, lithography machines, and controlled nuclear fusion concepts showing active performance.
Donghai Securities noted that July marks the start of the semi-annual earnings preview period, where corporate fundamentals may play a stronger role in pricing. Additionally, the economy showed resilience in the second quarter, and phased easing in Sino-US trade tensions has alleviated export pressures. Incremental policy support is expected to remain relatively moderate in the short term.
Key Investment Opportunities
Policy Support for Innovative Drug Development
On June 30, the National Healthcare Security Administration (NHSA) and the National Health Commission jointly issued the "Several Measures to Support the High-Quality Development of Innovative Drugs." A press conference held on July 1 detailed these measures, which include 16 initiatives across five areas: strengthening R&D support, facilitating entry into medical insurance and commercial health insurance directories, encouraging clinical application, improving multi-payer payment systems, and enhancing organizational guarantees. The measures aim to provide full-chain support for innovative drugs, from R&D to market access and payment, promoting "genuine innovation and differentiated innovation."
CITIC Securities highlighted that China’s innovative drug sector has achieved phased results, and these measures will further refine support for high-quality development. Embracing innovation-driven strategies, internationalization, self-sufficiency, and out-of-hospital marketing reforms are relatively certain investment directions for the second half of the year. With added domestic policy support alongside overseas breakthroughs, the era of true innovation and internationalization in pharmaceuticals is poised to yield returns, potentially driving steady sector growth. Horizontally,布局 should focus on innovation-driven and internationalized approaches, self-sufficiency, and out-of-hospital marketing reforms, particularly in the innovative drug领域 with the strongest beta效应.
Rising Prosperity in HVAC Equipment
The global computing market is entering a new high-growth cycle, rapidly expanding the heating, ventilation, and air conditioning (HVAC) and cooling markets. CITIC Securities pointed out that on the冷源侧, companies like Johnson Controls, Carrier, Daikin Group, and Trane dominate overseas markets. As global computing construction accelerates, supply and demand are gradually tightening. On the机柜侧, cold plate liquid cooling is currently the mainstream solution, involving core components such CDUs, cold plates, and quick connectors. With increasing server power density, related product solutions continue to evolve. For the冷源侧, focus on overseas leading core suppliers to capture the industry upcycle; for end liquid cooling equipment, pay attention to high-quality companies with technical strength and overseas channels.
AI Drives Rapid Growth in Communication Company Performance
In the second quarter of 2025, performance expectations for communication companies are分化 but overall improved compared to the first quarter. Thanks to the爆发 of North American AI demand, optical module leaders are expected to see rapid growth, and optical devices as well as second-tier optical modules may also accelerate.
CITIC Securities stated that domestic computing demand continues to improve, with domestic optical module and switch leaders expected to perform well. The AIDC sector, due to its heavy-asset nature, is likely to see improved performance in the second half of 2025. Traditional domestic communication equipment remains under pressure. Operator performance is generally stable, with growth expectations higher than in the first quarter. Driven by deep-sea construction, the optical cable and submarine cable industry may enter an upward trend. The Internet of Things (IoT) module sector continues to enjoy strong景气, with performance expected to grow sequentially. Focus on推荐 leaders in optical modules, AIDC, operators, and IoT.
Accelerated Commercialization of Nuclear Fusion
On June 30, US-based Commonwealth Fusion Systems (CFS) announced a record agreement with Google to supply 200MW of electricity from its first commercial fusion power plant, ARC, in the early 2030s. This signing marks the first commercial power purchase for fusion energy. Nuclear fusion, the energy mechanism of the sun and stars, has not yet been commercially applied on Earth. CFS, a startup spun off from MIT in 2018, is building the ARC demonstration project in Virginia, adjacent to the world’s largest data center cluster.
Minmetals Securities pointed out that according to global consulting firm The Business Research Company, the global controlled nuclear fusion market was valued at $331.49 billion in 2024 and is expected to grow at 5.9% to $351.11 billion by 2025. In the future, due to private sector investment, global energy transition, technological maturity, R&D initiatives, and policy and regulatory support, the fusion market is expected to continue strong growth, with a compound annual growth rate of 8.1% to $479.5 billion by 2029. The acceleration of commercialization in the fusion industry suggests持续关注产业催化.
Other Market-Moving News
NHSA: Commercial Insurance Innovative Drug Directory and Medical Insurance Directory Draft to Be Released Soon
At the July 1 press conference, NHSA Director of Pharmaceutical Management Huang Xinyu stated that the commercial insurance innovative drug directory is organized by the NHSA. The administration will leverage its expertise in medical insurance directory adjustments to reduce the administrative burden on companies from multiple applications. Plans include simultaneous declaration and adjustment procedures for both directories, with companies able to voluntarily apply for inclusion in the medical insurance drug directory, the commercial insurance innovative drug directory, or both. Drafts for both directories will be released soon.
Summer Travel Bookings Surge Year-on-Year
According to the "2025 Summer Travel风向标" released by Fliggy on July 1, bookings for air tickets, hotels, attractions, and car rentals have all increased significantly year-on-year. Long-distance travel consumption rose 7 percentage points compared to the same period last year, with northwest, northeast, and southwest regions being popular避暑 destinations. Data also showed that family travel is the main force for summer trips, accounting for 60% of travelers. Additionally, the college student demographic grew the fastest, with travel人次 increasing 77% year-on-year.
Yamingtong Responds: Industry Production Reduction Message accurate
On July 1, in response to market news that "leading domestic photovoltaic glass companies plan to collectively reduce production by 30% starting in July," Yamingtong Secretary of the Board Liu Qin told media that the message about production reduction in the photovoltaic glass industry is accurate. Accelerated capacity clearance will有力 promote subsequent sustainable and healthy development of the industry.
First Company Passes Review Under Restocked Sci-Tech Innovation Board Standard
On the evening of July 1, the Shanghai Stock Exchange’s listing review committee announced that it had approved the listing application of Wuhan Heyuan Biotechnology Co., Ltd. that day. This is the first IPO company to successfully pass the review since the restart of the fifth set of standards on the Sci-Tech Innovation Board.
On June 18, China Securities Regulatory Commission (CSRC) Chairman Wu Qing announced at the 2025 Lujiazui Forum that a Sci-Tech Growth Layer would be established on the Sci-Tech Innovation Board, and the fifth set of standards for listing unprofitable enterprises would be restarted.
Frequently Asked Questions
What is the significance of the policy support for innovative drugs?
The policy provides comprehensive support from R&D to market access and payment, encouraging genuine innovation and facilitating faster entry of breakthrough treatments into the market. This enhances the sector’s growth potential and investment appeal.
How does AI impact the communication sector?
AI drives demand for high-speed data transmission and processing, benefiting optical modules, data centers, and related infrastructure. Companies with strong technological capabilities and overseas exposure are well-positioned to capitalize on this trend.
Why is nuclear fusion gaining attention now?
Recent commercial agreements, like the one between CFS and Google, demonstrate progressing viability. With increasing investment and regulatory support, fusion energy is moving closer to practical application, offering long-term growth opportunities.
What are the key trends in summer travel?
Long-distance and family travel are dominant, with避暑 destinations in northwest and northeast China seeing high demand. The student demographic is also growing rapidly, indicating expanding consumer base for tourism services.
How does production reduction affect the photovoltaic glass industry?
Reducing output helps balance supply and demand, preventing oversupply and supporting price stability. This promotes healthier industry development and benefits leading companies with efficient operations.
What does the restart of the fifth set of standards mean for the Sci-Tech Innovation Board?
It allows unprofitable but high-growth tech companies to list, fostering innovation and providing investors with access to emerging enterprises. This enhances the board’s role in supporting China’s technological advancement.
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