The importance of risk management in China
China’s equity markets posted solid gains in July, supported by improving sentiment and thematic sector strength. Mainland-listed A-shares outperformed Hong Kong-listed H-shares, reversing the relative outperformance seen in the first half of the year. The rally was led by themes such as computing power, “anti-involution” (efforts to curb excessive internal competition), biotech and new consumption. The MSCI China Index and the MSCI China A Onshore Index were up by 4.8% and 4.4% respectively. Macro-sensitive sectors, including home appliances, real estate, and food & beverage, remained muted. Inflows from retail, pension, and insurance investors remained strong, and average daily turnover surged to approximately CNY 0.8 trillion, up from CNY 0.5 trillion in June.