(Yicai) July 20 -- The Chinese mainland’s four major stock markets closed mixed, with China International Capital Corporation saying the latest market correction reflects excessive pessimism and that the second buying opportunity of the year may have dawned.

The Shanghai Composite Index rose 0.9 percent today, while the Shenzhen Component Index fell 0.7 percent, leaving both below their levels at the start of the year. The ChiNext Index gained 0.4 percent, and the Star Composite Index dropped 2.3 percent.

Chinese asset valuations have fallen to relatively low levels compared with major global markets following the recent pullback, making them increasingly attractive as an asset revaluation process gathers pace, the major investment bank said in a research report.

Combined turnover on the Shanghai and Shenzhen exchanges reached CNY2.7 trillion (USD398.7 billion) today, up CNY47.2 billion (USD6.97 billion) from the previous trading day. More than 3,700 of over 5,500 listed stocks declined, while more than 200 stocks fell by their daily trading limits.

Power and coal stocks led gains, with many hitting their daily upper limits. Liquor, oil and gas, banking, insurance, and brokerage shares also outperformed. Meanwhile, the computing hardware supply chain came under heavy selling pressure, with printed circuit boards, lithography equipment, and co-packaged optics leading losses. Photovoltaics, robotics, commercial aerospace, and lithium battery stocks also declined sharply.

The CICC report attributed the recent market weakness to a combination of overseas and domestic factors, including deteriorating sentiment toward the global artificial intelligence sector since late last month, a sharp fall in South Korea's stock market amid deleveraging, renewed geopolitical risks, and a correction in technology shares.

The brokerage added that trading in A-shares, or mainland-listed stocks, had become overheated between mid-May and the end of June, with turnover rates exceeding 5 percent of free-float market capitalization on several occasions.

CICC said the market sell-off accelerated between July 15 and 17. On the 17th, the Shanghai Composite fell to its lowest level this year, while both the ChiNext and the Star 50 indexes dropped more than 7 percent in a single session. Their declines for the month ranked as the third-largest and largest on record, respectively.

China’s “national team” of state investment funds have subsequently poured about CNY60 billion (USD8.9 billion) into listed shares of state-owned enterprises in an effort to shore up stocks.

The “national team” is a term used to describe a group of state-backed financial institutions, including China Reform Holdings, China Chengtong Holdings Group, and Central Huijin Investment, that can buy stocks and exchange traded funds during market stress to support prices and investor confidence.

China Reform and its affiliates recently invested more than CNY50 billion through special relending facilities for share buybacks and stake increases, along with matching capital, it announced late yesterday, while China Chengtong said that it and its affiliated investment vehicles had spent nearly CNY10 billion and will continue adding to their holdings in central SEOs, tech companies, and ETFs. Several listed companies have also revealed plans to buy back their own shares.

Looking ahead, CICC expects the release of first-half earnings next month to provide fundamental support for the market. In its mid-year outlook published in June, the brokerage forecast 2026 profit growth of 6.3 percent for A-share listed companies and 9.9 percent for non-financial firms, the most since 2022.

Editor: Emmi Laine