Key Takeaways:
China's WanDe All-A index fell 1.5% for the week ended Aug. 21, pressured by US 30-year Treasury yields reaching 5.30%, the highest since June 2007.
"Rising US yields and a weakening global tech narrative are pressuring risk appetite, while funds rotate toward resources and banks," analysts at Founder Securities said in a research note.
The Shanghai Composite fell 0.6% and the ChiNext dropped 2.2%. Daily average turnover declined about 855 billion yuan to 2.27 trillion yuan. Oil & petrochemicals led gains at +5.4%, followed by non-ferrous metals at +2.5% and banks at +2.4%. Media fell 5.5%, computers dropped 5.0%, and defense declined 3.8%.
The selloff coincided with the US 30-year Treasury yield surging past 5.30% on Wednesday, the highest level since June 2007, as investors demanded higher compensation for inflation and fiscal risks. The US Treasury responded by doubling its long-dated debt buybacks to at least $4 billion, but the 30-year yield had already re-gained the drop within two days, closing Friday at 5.27%.
The week's decline unfolded in two phases. Markets rallied early Monday on NVIDIA's announcement that its Spectrum-X co-packaged optics switches entered full mass production, and SK Hynix's $38.4 billion plan to build a new wafer fab in South Korea. But the advance stalled Tuesday as weak domestic economic data and softness in Japan and Korea deepened investor caution. JPMorgan's report warning of a potential global food crisis next year lifted agriculture stocks, while the expiration of the US-Iran 60-day memorandum of understanding pushed oil prices higher.
Wednesday marked the sharpest selloff. The 30-year US Treasury yield broke above 5.30%, and tech narratives cracked as Anthropic's annualized revenue run rate missed expectations and OpenAI announced it would pause frontier model training. Thursday brought partial recovery as SK Hynix announced a large buyback, the US Treasury expanded its long-dated debt repurchases, and Moderna's cancer vaccine posted positive Phase 3 results. Friday saw renewed strength in semiconductors as SK Hynix and University of Virginia researchers published a next-generation co-packaged optics roadmap, and a new round of chip price increases took effect.
The Trump administration's sanctions on Iran, described as the "most severe" ever imposed, combined with slower-than-expected progress at the Xijiwo Mine restart, pushed non-ferrous metals higher. The weak-dollar environment supported commodity-linked sectors including energy storage, grid equipment, and coal. Moutai's interim report missing expectations dragged liquor stocks lower, while the healthcare 15th Five-Year Plan implementation lifted pharma names.
Founder Securities recommends positioning in three areas: tech sub-sectors with pricing power and volume growth, including overseas compute names with low crowding and domestic semiconductor equipment and materials; weak-dollar beneficiaries across non-ferrous metals, chemicals, energy storage, and grid equipment; and healthcare leaders with strong fundamentals and easing negative pressures.
The US 10-year Treasury yield closed Friday at 4.74%, just 1 basis point below its July 31 level, suggesting the bond market's pressure on equities has not fully abated. US government debt reached $40 trillion this week, and annual interest costs now exceed $1 trillion, according to Treasury data. With oil prices continuing to climb on Iran sanctions, the Federal Reserve faces a difficult choice between fighting inflation and supporting growth, keeping the yield curve under pressure into the Jackson Hole Symposium next week.
This article is for informational purposes only and does not constitute investment advice.
