Firmly optimistic about China’s capital market, two major central enterprises—China Reform and China Chengtong—announced continued increases in their holdings; the last time was in April last year.

Firmly optimistic about China’s capital market, two major central enterprises—China Reform and China Chengtong—announced continued increases in their holdings; the last time was in April last year.

The two major state-owned capital operation platforms have once again acted in sync after about 15 months, announcing an increase in their holdings of Chinese stock assets.

On the evening of July 19, China Reform Holdings and China Chengtong successively issued announcements, both expressing their "firm optimism about the prospects for the development of China's capital market," and announcing that they would continue to increase their holdings of central state-owned enterprise stocks and technology assets.

China Reform Holdings stated that it firmly supports technological innovation and high-quality development of central state-owned enterprises. The relevant entities under Guoxin Investment Co., Ltd. have already used more than 50 billion yuan from stock repurchase special refinancing loans and supporting funds to help maintain market stability. In the future, they will continue to fully utilize refinancing as a policy tool, supplemented by their own funds to further increase holdings of central enterprise stocks, resolutely safeguard the strategic value of core assets in the capital market, and firmly maintain the stable and healthy operation of the capital market.

China Chengtong stated that China Chengtong and its subsidiaries Chengtong Capital and Chengyang Investment have recently focused on large-scale increases in holdings of Chinese stock assets by state-owned capital and central enterprises, accumulating purchases of nearly 10 billion yuan. They are firmly optimistic about the prospects for China's economy and capital market, and in the future will continue to use their own funds and stock repurchase special refinancing loans to make large increases in holdings of stocks and ETFs for state-owned central enterprises and technology companies, fully maintaining the stable operation of the capital market.

This is the second synchronized public statement to increase holdings by the two institutions since April 2025. The last time was from April 7 to 8, 2025, when A-shares were experiencing the deepest correction since the "9-24" market in 2024. After consecutive statements from the two institutions, the market started a rally lasting more than a year.

Who are these two institutions?

China Reform Holdings and China Chengtong are both central enterprises under the supervision of the State-owned Assets Supervision and Administration Commission (SASAC). In early 2016, these two central enterprises were designated as pilot companies for state-owned capital operation, and officially moved to a phase of deepening reform in December 2022.

The core function of both institutions is "managing capital"—they do not focus deeply on manufacturing, but instead optimize the layout of state-owned capital through equity, funds, and financial instruments.

In terms of scale, China Reform Holdings has total assets exceeding 1 trillion yuan, focusing on technological innovation by central enterprises, strategic emerging industries, and management of listed company equity value; China Chengtong aims to reach "a consolidated asset total of around 700 billion yuan and net assets of about 300 billion yuan" by the end of 2025.

For this reason, actions taken by these two institutions in the secondary market are viewed by the market as clear signals from state-level capital.

Direction of increased holdings: central enterprise assets and hard technology

Judging from the targets of increased holdings in both announcements, the focus is highly concentrated on two main lines.

The first is the core assets of central and state-owned enterprises. China Reform Holdings has clearly named increasing holdings of central enterprise stocks as its core objective, "firmly safeguarding the strategic value of core assets in the capital market;" China Chengtong has also made holdings in state-owned central enterprises its top priority.

The second is the technology sector. China Chengtong directly named increasing holdings of technology company stocks and technology-themed ETFs; China Reform Holdings also stressed its "firm support for technological innovation and high-quality development of central enterprises."

The targets of increased holdings in both announcements are highly focused, suggesting that "central enterprise assets and technological innovation may become the market's main lines of concern."

How does the market view the current position?

A research report by CITIC Securities on July 19 pointed out that the current index market is in "a phase from the end of a mid-term correction to the brewing of a new round, with the short-term clearing process nearly finished."

CITIC Securities further judged: North American AI chains may be a short-term safe haven within technology, and a wave of recovery may occur around the guidance from North American CSPs at the end of July; the domestic AI chain depends heavily on catalysts and strong trend funds, with most main catalysts already realized, "the convergence in valuation between domestic and North American chains is a probable direction;" non-AI chains tend to undergo sequential recoveries, starting with innovative drugs and non-banking, gradually transitioning to colored metals, chemicals, and lithium batteries in the industrial chain.

Mainstream institutions believe that this round of correction is just a revision at the capital and trading structure level, not a reversal of industry trends or fundamentals; the downside room is limited and the medium-term upward trend remains unchanged.

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