A-Share Market Reclaims 4,000 Point Threshold: Confidence Recovery and Structural Revaluation Amid Volume-Price Synchrony

Confidence Restoration Amid Volume-Price Synchronization: 4,000 Points Is Not the Destination—But the Starting Point of Structural Revaluation

In early June, China’s A-share market witnessed a landmark turning point: the Shanghai Composite Index returned to the 4,000-point psychological threshold for the first time in several months, while the ChiNext Index surged 3.87% in a single day. Total market turnover reached RMB 2.67 trillion—the highest level so far in 2024. This “synchronized rise in price and volume” is far more than a technical rebound; it reflects deep resonance among three foundational bottoms—policy, economic, and sentiment. More significantly, investor fund allocation is undergoing substantive change: sector rotation is shifting from theme-driven speculation toward earnings validation. Above 4,000 points, technical resistance has ceased to be a mere psychological barrier—it has become a critical gauge of both the effectiveness of incremental policy measures and the resilience of micro-level market confidence.

Policy Bottom: From “Floor Support” to “Systemic Restructuring”—A Surge of Institutional Signals

The most solid underpinning of this rally lies in systemic optimization of the capital market’s foundational institutions. Following implementation of the new “Nine National Guidelines,” supporting regulatory details have been rolled out rapidly:

• M&A review efficiency has markedly improved, and channels for injecting high-quality assets have been substantively widened;
• IPO pacing now employs phased, dynamic adjustment—strictly guarding the “entry gate” while reinforcing the rigidity of delisting at the “exit gate”;
• Dividend regulation has been upgraded, with targeted investigations launched into companies that consistently withhold dividends or exhibit abnormal payout behavior.

These are not ad hoc stabilization measures—but deliberate steps toward functional repositioning: transforming the capital market from a financing tool into a central hub for resource allocation and a platform for innovation-driven capital formation. Notably, regulators are demonstrating stronger inter-agency coordination: the CSRC, jointly with the Ministry of Finance and the State Taxation Administration, has clarified the application scope of tax incentives for equity-based incentives at tech enterprises; together with the NDRC and MIIT, it has issued the Guidance on Investment & Financing for Strategic Emerging Industries. Policy synergy is finally overcoming the historical limitations of fragmented, siloed initiatives.

Economic Bottom: High-Frequency Data Confirm Recovery Trajectory—Yet Structural Divergence Deepens

At the macro level, May’s manufacturing PMI stood at 50.4—remaining above the 50-point expansion-contraction threshold for three consecutive months. Real estate sales show marginal improvement: sales area across 30 major cities rose 12% month-on-month, while second-hand home listing prices in Tier-1 and strong Tier-2 cities have stabilized after recent declines. Yet we must remain clear-eyed: this recovery is not broad-based. Capacity utilization in the new-energy vehicle (NEV) supply chain has rebounded to 78%; photovoltaic module export orders grew 23% year-on-year. By contrast, inventory turnover days for traditional building materials and home furnishing firms remain 15% above their historical average. This “K-shaped recovery” explains why leading sectors are concentrated in advanced manufacturing and hard-tech domains—capital is voting with its feet, seeking certainty where genuine earnings elasticity exists.

Sentiment Bottom: Geopolitical Headwinds Ease; Technology Stocks Anchor Performance with Earnings

External conditions are improving:

• Sino-U.S. high-level economic and trade communications have increased in frequency, and approval cycles for semiconductor equipment imports have shortened;
• Though subject to uncertainty, former U.S. President Trump’s comment that a U.S.-Iran deal could be reached “within two or three days” signals easing Middle East tensions—boosting global risk appetite;
• President Xi Jinping’s successful state visit to North Korea has injected stability into Northeast Asian regional cooperation.

More crucially, the technology rally is now grounded in robust earnings: U.S.-listed GDS Holdings surged over 8.5% pre-market, driven by 31% year-on-year revenue growth in Q1 and strong order visibility for AI computing services; BYD Chairman Wang Chuanfu stated at the annual general meeting that “the stock price has yet to reflect the company’s full potential,” citing a 42% YoY surge in Q1 NEV sales and blade-battery supply contracts already secured with major European automakers. When thematic narratives meet quarterly earnings verification, market sentiment undergoes a qualitative shift—from “storytelling” to “proof-of-execution.”

Fund Structure: Three-Pronged Catalyst—Northbound Inflows, Margin Expansion, and Implicit “National Team” Purchases

This rally’s funding base exhibits clear stratification:

• Northbound funds recorded net inflows for 12 consecutive trading days, totaling RMB 32.8 billion, with heavy buying in semiconductor equipment, innovative pharmaceuticals, and domestic industrial software;
• Margin financing balances surpassed RMB 1.85 trillion—up 11% from end-April—with newly leveraged capital flowing predominantly into CSI STAR 50 constituents;
• Most meaningfully, shares of certain SOE-focused ETFs surged by 4.7 billion units in a single week; large-scale subscriptions were seen in Huaxia and E Fund’s SOE Dividend ETFs—suggesting implicit “national team” purchases via index-based instruments.

This structure reveals a layered rationale: foreign investors are returning based on long-term valuation re-rating of Chinese assets; leveraged capital targets clearly defined growth sectors aligned with national industrial trends; and strategic funds support core assets through increasingly market-oriented mechanisms. These three drivers complement—not substitute for—each other.

Sector Rotation: Thematic Speculation Fades; Earnings-Based Pricing Establishes New Anchors

Market style is undergoing a pivotal transition: previously outperforming pure-theme sectors—including low-altitude economy and “Sora”-related concepts—are correcting sharply, while sectors backed by tangible order visibility continue gaining strength. The successful launch of the Zhuque-2 Improved rocket lifted aerospace electronics and satellite navigation stocks by over 15% weekly; related firms now report order visibility covering 70% of full-year 2024 revenue. In the NEV chain, solid-state battery commercialization is progressing faster than expected: Ganfeng Lithium’s solid electrolyte production line has commenced operations, lifting valuation benchmarks for upstream material suppliers. This confirms an emerging trend: investors are replacing soft metrics—“concept热度,” “theme scarcity”—with hard indicators—“order visibility,” “capacity ramp-up rate,” and “gross margin improvement.” Market pricing logic is shifting decisively from valuation arbitrage to earnings verification.

Beyond 4,000 Points: Technical Resistance Becomes a Policy Stress Test—Upside Depends on Reform Depth

Technically, the Shanghai Composite’s 4,000–4,100 point range faces dense lock-in positions from Q4 2023—suggesting near-term consolidation may be needed. But what truly determines the rally’s ceiling is whether policy can deliver sustained breakthroughs across three dimensions:

1. Whether IPO pricing reform under the registration-based system can genuinely realize “premium pricing for premium assets,” avoiding market trust erosion from subpar listings;
2. How effectively SOE performance evaluation shifts from “total profit” to a dual metric of “ROE + proportion of R&D investment in innovation”;
3. The operational synergy between real estate risk resolution and capital market stability.

Now that 4,000 points has become the new benchmark, market expectations have evolved beyond simple “floor support.” What investors seek is incremental value creation through institutional supply—a true watershed marking China’s capital market transition from “scale expansion” to “quality leap.”