China Daily Briefing

Chinese stock traders slashed leveraged margin positions by 14% in July amid the tech-driven sell-off — the largest single-month reduction this year. This is significant: elevated leverage was the amplifier for last year's rally, and its removal reduces both upside velocity and crash risk symmetrically. PBOC's steady OMO operations have maintained liquidity, and social security fund data showing stake-building in A-share firms suggests policy floors are active. The setup is a slower, cleaner grind higher — not the leverage-fueled spike bulls want.

MiniMax, one of China's leading AI model companies, has restricted overseas access to its new AI video generation model over copyright disputes — a significant speed bump for the offshore AI trade that has been pricing in China tech as a global AI alternative. SpaceX's report and share unlock are also cited as potential catalysts for HK and mainland AI stocks as investors rotate. The MiniMax development reinforces that China AI's path to global monetization runs through IP headwinds that Western counterparts don't face.

Multiple Chinese brokerages have published A-share tech and chip rebound calls — citing PBOC liquidity support, the 14% leverage reduction (which clears forced-selling overhang), and improving semiconductor cycle signals. Goldman Sachs separately noted China's outsized commodities footprint cushions global energy shocks — a macro positive for A-share industrials. The divergence between broker optimism and today's FXI -0.58% reflects the lag between onshore broker calls and offshore ETF flows — Northbound flow data this week will be the arbiter.