The PBOC maintains a 350 billion yuan reverse repo rate at 1.40%, resulting in net inflow of 0 to expiry
Early on Monday, macro liquidity and micro market sentiment seemed to be slightly out of sync. The People’s Bank of China conducted a 350 billion yuan reverse repo operation with a 7-day term via open market operations. The operation rate was kept at 1.40%, unchanged from the previous operation. Since there were no reverse repo maturities due that day, this implies a net injection of 350 billion yuan. This combination sends a clear technical signal: the central bank is carrying out routine liquidity-smoothing management—neither tightening funding through large-scale drainage nor releasing expectations of loosened policy via a significant rate cut or an over-sized injection. In the absence of repayment pressure from maturing repos, this “equal-sized injection, unchanged rates” pattern confirms that monetary policy is in a wait-and-see phase, maintaining its current stance. For short-term funding conditions, key rate indicators such as DR007 are likely to remain within a low-range, choppy trading band, as the market does not feel any substantial tightening or loosening. This neutral-but-stable liquidity base provides equities with a relatively certain macro backdrop, eliminating tail risks of a sudden funding squeeze. Investors can therefore shift attention from debating monetary policy to pricing assets based on their fundamentals.
Meanwhile, Hong Kong stocks showed clear structural divergence in the morning. This split was not driven by stimulus from macro policy, but rather by internal market funds searching for new pricing anchors. The Hang Seng Index opened up 0.51%, while the Hang Seng Tech Index’s gains widened to 1.01%, indicating a notably stronger preference for high-beta assets. At the individual-stock level, trading activity outperformed the index, forming a pattern of “the index is steady while individual stocks are active.” Specifically, AI-industry-chain related stocks led the rally: Tianchuang Zhixin and MINIMAX both rose more than 5%, Tencent Music rose nearly 5%, and Zhipu rose more than 4%. This broad move suggests that market sentiment has not faded despite a flat macro policy backdrop; instead, new driving logic has been found within the technology growth sector. Tianchuang Zhixin and MINIMAX—representing AI compute power and model-side capabilities—signal that the market is re-assessing the AI industry chain’s ability to deliver performance, and is willing to pay higher valuation multiples for technological moats and commercialization potential. The rise in Tencent Music and Zhipu further points to the application layer of large models and consumer internet platforms that benefit from them, showing that capital is shifting from purely defensive positioning to a more offensively oriented layout with growth elasticity.
This change in market structure is, in essence, a shift in the pricing mechanism: from sensitivity to macro liquidity toward chasing micro-level growth. With the PBOC keeping rates unchanged and no maturities coming back, short-term funding uncertainty is removed, allowing risk appetite to remain intact and even expand slightly. In this environment, traditional cyclical sectors have performed tepidly due to a lack of catalysts, while sectors such as AI compute power and large-model applications—backed by clear technology narratives and capital expenditure cycles—delivered outsized returns. This is not just simple thematic speculation; rather, under a neutral macro backdrop, funds are re-pricing assets supported by real performance or high growth expectations. Tianchuang Zhixin, MINIMAX, and other individual stocks substantially outperformed, indicating that the market is pricing the AI infrastructure build-out cycle. This valuation logic requires investors to screen individual companies more carefully for fundamental support, rather than simply follow index fluctuations. However, this type of structural rally also carries risks: gains may be confined to a limited number of leading firms with core competitiveness, and if performance validation remains narrow, internal market volatility could increase.
As for the market’s next direction, attention should focus on ongoing validation of liquidity and the technology sector’s earnings guidance. First, monitor the scale and rate changes of reverse repo operations over the next few trading days. If the PBOC continues a “small-amount, steady” operational rhythm and DR007 remains around 1.40%, it would confirm a neutral-to-loose liquidity tone, which would continue to support the valuation center of high-valuation growth stocks. Second, look within the Hang Seng Tech Index’s constituents to see whether, beyond AI hard-tech, more traditional internet giants are also joining the upswing—this would validate the breadth of the rally. If the gains remain limited to only a handful of AI concept stocks, investors should be alert to the risk of a pullback after potential overheating. Third, track the coupling movement between the U.S. dollar index and the RMB exchange rate. Although this operation did not directly involve FX, stable domestic funding conditions can help keep exchange-rate expectations stable, which in turn affects foreign investors’ willingness to allocate to Hong Kong stocks. Finally, for stocks with large gains such as Tianchuang Zhixin and MINIMAX, pay attention to whether trading volume can keep expanding and whether subsequent fundamental catalysts—such as institutional research visits or earnings releases—materialize, to distinguish between short-term sentiment-driven trading and a medium-to-long-term value re-rating.
In the absence of new macro data shocks, the market will most likely continue this “macro-neutral, micro-active” pattern, with internal rotation within the technology growth sector becoming the key variable driving the trend. Investors should be cautious about chasing AI concept stocks blindly when there is insufficient earnings support, and also watch whether the PBOC releases clearer signals for medium-to-long-term liquidity through tools such as the MLF to confirm the direction of liquidity over the medium and long run.
Follow me—my next post will be a quick read of the market so you don’t miss what matters.
Early on Monday, macro liquidity and micro market sentiment seemed to be slightly out of sync. The People’s Bank of China conducted a 350 billion yuan reverse repo operation with a 7-day term via open market operations. The operation rate was kept at 1.40%, unchanged from the previous operation. Since there were no reverse repo maturities due that day, this implies a net injection of 350 billion yuan. This combination sends a clear technical signal: the central bank is carrying out routine liquidity-smoothing management—neither tightening funding through large-scale drainage nor releasing expectations of loosened policy via a significant rate cut or an over-sized injection. In the absence of repayment pressure from maturing repos, this “equal-sized injection, unchanged rates” pattern confirms that monetary policy is in a wait-and-see phase, maintaining its current stance. For short-term funding conditions, key rate indicators such as DR007 are likely to remain within a low-range, choppy trading band, as the market does not feel any substantial tightening or loosening. This neutral-but-stable liquidity base provides equities with a relatively certain macro backdrop, eliminating tail risks of a sudden funding squeeze. Investors can therefore shift attention from debating monetary policy to pricing assets based on their fundamentals.
Meanwhile, Hong Kong stocks showed clear structural divergence in the morning. This split was not driven by stimulus from macro policy, but rather by internal market funds searching for new pricing anchors. The Hang Seng Index opened up 0.51%, while the Hang Seng Tech Index’s gains widened to 1.01%, indicating a notably stronger preference for high-beta assets. At the individual-stock level, trading activity outperformed the index, forming a pattern of “the index is steady while individual stocks are active.” Specifically, AI-industry-chain related stocks led the rally: Tianchuang Zhixin and MINIMAX both rose more than 5%, Tencent Music rose nearly 5%, and Zhipu rose more than 4%. This broad move suggests that market sentiment has not faded despite a flat macro policy backdrop; instead, new driving logic has been found within the technology growth sector. Tianchuang Zhixin and MINIMAX—representing AI compute power and model-side capabilities—signal that the market is re-assessing the AI industry chain’s ability to deliver performance, and is willing to pay higher valuation multiples for technological moats and commercialization potential. The rise in Tencent Music and Zhipu further points to the application layer of large models and consumer internet platforms that benefit from them, showing that capital is shifting from purely defensive positioning to a more offensively oriented layout with growth elasticity.
This change in market structure is, in essence, a shift in the pricing mechanism: from sensitivity to macro liquidity toward chasing micro-level growth. With the PBOC keeping rates unchanged and no maturities coming back, short-term funding uncertainty is removed, allowing risk appetite to remain intact and even expand slightly. In this environment, traditional cyclical sectors have performed tepidly due to a lack of catalysts, while sectors such as AI compute power and large-model applications—backed by clear technology narratives and capital expenditure cycles—delivered outsized returns. This is not just simple thematic speculation; rather, under a neutral macro backdrop, funds are re-pricing assets supported by real performance or high growth expectations. Tianchuang Zhixin, MINIMAX, and other individual stocks substantially outperformed, indicating that the market is pricing the AI infrastructure build-out cycle. This valuation logic requires investors to screen individual companies more carefully for fundamental support, rather than simply follow index fluctuations. However, this type of structural rally also carries risks: gains may be confined to a limited number of leading firms with core competitiveness, and if performance validation remains narrow, internal market volatility could increase.
As for the market’s next direction, attention should focus on ongoing validation of liquidity and the technology sector’s earnings guidance. First, monitor the scale and rate changes of reverse repo operations over the next few trading days. If the PBOC continues a “small-amount, steady” operational rhythm and DR007 remains around 1.40%, it would confirm a neutral-to-loose liquidity tone, which would continue to support the valuation center of high-valuation growth stocks. Second, look within the Hang Seng Tech Index’s constituents to see whether, beyond AI hard-tech, more traditional internet giants are also joining the upswing—this would validate the breadth of the rally. If the gains remain limited to only a handful of AI concept stocks, investors should be alert to the risk of a pullback after potential overheating. Third, track the coupling movement between the U.S. dollar index and the RMB exchange rate. Although this operation did not directly involve FX, stable domestic funding conditions can help keep exchange-rate expectations stable, which in turn affects foreign investors’ willingness to allocate to Hong Kong stocks. Finally, for stocks with large gains such as Tianchuang Zhixin and MINIMAX, pay attention to whether trading volume can keep expanding and whether subsequent fundamental catalysts—such as institutional research visits or earnings releases—materialize, to distinguish between short-term sentiment-driven trading and a medium-to-long-term value re-rating.
In the absence of new macro data shocks, the market will most likely continue this “macro-neutral, micro-active” pattern, with internal rotation within the technology growth sector becoming the key variable driving the trend. Investors should be cautious about chasing AI concept stocks blindly when there is insufficient earnings support, and also watch whether the PBOC releases clearer signals for medium-to-long-term liquidity through tools such as the MLF to confirm the direction of liquidity over the medium and long run.
Follow me—my next post will be a quick read of the market so you don’t miss what matters.
