The A-share market in mid-2026 has become a tale of two realities. While artificial intelligence infrastructure continues to lure capital with the promise of a digital-first future, high-quality traditional assets—the so-called 'non-silicon' stocks—are facing a paradoxical sell-off. This divergence reflects a broader tension in Chinese equity markets: a frantic chase for technological growth versus the underlying resilience of industrial fundamentals.
On June 18, the divergence reached a tipping point. As the Sci-Tech 50 index surged by nearly 4%, traditional power and financial sectors lagged, weighed down by what analysts describe as passive liquidity pressure. Investors exiting dividend-yielding assets to cover other positions have inadvertently put some of China's most robust companies on sale at discounted valuations.
Chen Guo, Chief Strategist at East Money, argues that this sell-off is a liquidity-driven anomaly rather than a fundamental shift toward a bear market. He points specifically to the non-bank financial sector, particularly brokerages, which are currently trading at price-to-book ratios lower than 90% of their historical data. Despite these low valuations, their return on equity has hit multi-year highs, suggesting a spring-loaded recovery is imminent.
The bullishness extends to the 'old energy' sector as well. Despite market fears of a coal production glut, thermal coal prices remain steady and coking coal continues an upward trajectory. With mid-year earnings for major coal firms projected to double compared to last year, the sector represents a high-certainty play in an otherwise volatile environment, anchored by a high-growth, high-sustainability outlook for the latter half of the year.