A-share market remains in firm territory

A stock trader follows market trends at a securities trading hall in Hangzhou, Zhejiang province. (Long Wei/FOR CHINA DAILY)

China's A-share market has remained steadfast despite headwinds in major Asian markets at the start of the month, and is likely to provide more structural opportunities as the nation rolls out more supportive measures and its economic fundamentals stabilize further, experts said.

The benchmark Shanghai Composite Index gained 0.43 percent to close at 3361.98 points on Tuesday, while the Shenzhen Component Index closed 0.16 percent higher. Combined trading value at the Shanghai and Shenzhen exchanges exceeded 1.14 trillion yuan ($160 billion), up 0.2 percent from the previous trading day.

Jewelry and accessories companies reported the biggest daily increase of 5.21 percent on average, partly due to the return of benchmark COMEX gold futures to above the $3,400 per ounce level on Tuesday.

Experts from Minsheng Securities said the possibility of the United States imposing 50 percent tariffs on goods from the European Union may have aggravated market concerns over trade uncertainties, supporting gold prices. The Chinese A-share market was closed on Monday for the Dragon Boat Festival.

Analysts from Huaxi Securities said that demand for gold accessories will remain robust as they can secure value to a certain extent. Jewelry companies with stronger insights into consumer demand still have room for growth even if the overall consumption sentiment is not that upbeat.

The stock market rally on Tuesday was also partly driven by an average 2.17 percent increase reported by banks, which are A-share market heavyweights.

According to Cai Fangyuan, a strategist from China Galaxy Securities, the investment value of banks is especially noticeable amid higher market volatility, thanks to the lenders' stable business forecasts, lower valuations and high dividend payouts.

Major Asian markets slumped on Monday, with the Hang Seng Index shedding 2.47 percent during early trade, while the Nikkei 225 dropped by 1.37 percent.

This focused more attention on the Chinese mainland A-share market on Tuesday, especially after its bullish momentum had slowed somewhat in the latter half of May.

The 3.79 percent average gain reported by A-share innovative drug companies was another highlight of the market performance on Tuesday.

This marked a third consecutive day of increases for these companies, and a robust 30 percent spike since April 7.

The strong secondary market performance may have been catalyzed by the fact that at least six Chinese innovative drugmakers announced their business development orders in May.

Most of these orders are from cross-border cooperation between Chinese companies and their overseas counterparts. Public data show that outbound deals of innovative drugs have totaled $45.5 billion so far this year, which may hit a record when 2025 wraps up, according to industry experts.

Experts from Kaiyuan Securities said they hold a positive outlook on the performance of A-share innovative drug companies in the second half of the year, attributing it to their higher technology barriers and market value. The overall pharmaceutical sector may be boosted as more capital and resources are directed to the research and development of innovative drugs, they said.

Xu Chi, chief strategist of Zhongtai Securities, said the A-share market will sit on solid ground in the near future, but the downward pressure should not be overlooked.

Internal factors that influence the stock market for a longer period, such as the property sector, have been showing positive signs. Combined with a stable yuan and China's economic outlook, there is limited room for the stock market to head south even if it undergoes some ups and downs.

Dong Zhongyun, chief economist at AVIC Securities, said that higher risks are latent in the global capital market as tariff issues are still present. However, as China continues to safeguard its financial stability, the overall volatility of Chinese assets may be lower, helping them to serve as a haven for global investors.