State Council Focuses Anti-Involution Campaign On EV Industry
5 Min. Read Time
Key News
Asian equities retreated following yesterday’s strong gains as Vietnam outperformed and the Philippines lagged behind.
The most significant development came after the market closed, as Premier Li chaired a State Council meeting focused on regulating competition in the New Energy Vehicle (NEV) industry. The meeting emphasized the need to address “irrational competition” and called for effective government regulation to restore order in the sector. Additionally, the meeting highlighted the importance of “strengthening the domestic big cycle," a reference to boosting domestic consumption and optimizing policies for trading in old consumer goods for new ones.
Solar stocks continued to benefit from the government’s “anti-involution” campaign, which aims to curb destructive price wars and promote sustainable industry growth. The renewed focus on electric vehicles (EVs) is notable, especially as “overcapacity” remains a key issue in ongoing US-China trade negotiations. This policy emphasis may play a role in future trade discussions between the two countries.
Separately, the China Chain Store & Franchise Association (CCFA) issued a statement warning that the intensifying “real-time retail price subsidy war” among platforms is disrupting fair competition. The association urged its members to resist “involution-style” price competition, which has led to a race to the bottom in sectors like restaurants and instant retail. This move reflects the broader anti-involution mandate filtering through the economy and may signal a turning point in China’s domestic deflationary pressures.
Nvidia CEO Jensen Huang’s recent speech has attracted significant attention. Mainland media have speculated about a potential partnership between Nvidia and Xiaomi following Huang’s comments about purchasing a Xiaomi car. It is striking how little analysis has been done of the contrasting results of Xiaomi and Apple, two of the world’s largest smartphone makers, in the vehicle industry. Xiaomi has succeeded, while Apple barely got off the ground.
Hong Kong markets saw profit-taking, with high but lighter volumes compared to the previous day. Notable moves included Alibaba (+0.26%), Tencent (-0.19%), Meituan (-1.66%), Pop Mart (-4.03%) despite a positive preliminary profit release, and Guotai Junan (+4.93%).
Media and entertainment stocks continued to perform well, including Kuaishou (+2.13%), Tencent Music Entertainment (+2.37%), and Bilibili (+1.73%), all of which hit 52-week highs. In contrast, Hong Kong and Mainland China real estate stocks underperformed after the China Urban Work Conference ended without new policy initiatives, and June sales data remained weak.
Mainland investors purchased $204 million of Hong Kong-listed stocks and ETFs today via Southbound Stock Connect, bringing the year-to-date total to over $100 billion. Tencent continued to see net selling through Southbound flows, suggesting investors are using it as a funding source. The Mainland market was relatively quiet as attention shifted toward upcoming earnings releases.
A Mainland media source highlighted a statement from Unitree’s CEO, who noted: “The global vision for humanoid robotics technology and product development remains largely aligned, while countries may differ in cultural and industrial backgrounds.” He emphasized that China excels in hardware and manufacturing, while the United States leads in AI software ecosystems.
Finally, Nvidia’s market capitalization has surpassed the GDPs of India, the United Kingdom, France, Italy, Canada, and South Korea. As of July 2025, Nvidia’s valuation reached $4 trillion, making it larger than the economies of nearly every country except the United States, China, Germany, and Japan.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.3% |
| Hang Seng Tech | HSTECH Index | -0.2% |
| Hong Kong Turnover | HKTurn Index | -10.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -10.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 12.1% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | 0.1% |
| China (STAR Board) | Star50 Index | 0.1% |
| Mainland Turnover | .chturn Index | -11.3% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.1% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | 0.1% |
| Indonesia | JCI Index | 0.7% |
| Malaysia | FBMKLCI Index | -0.9% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | -1.9% |
| South Korea | KOSPI Index | -0.9% |
| Taiwan | TWSE Index | 0.9% |
| Thailand | SET Index | -0.3% |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | -0.8% |
| Vietnam | VNINDEX Index | 1% |
| Indicator | A | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 127% | 107% |
| Advancing Stocks | 198 | 2933 |
| Declining Stocks | 275 | 1974 |
| Outperforming Factors | Low Volatility | Low Volatility |
| Underperforming Factors | Value, Quality, Dividend Yield | Liquidity, Value, EPS Revisions |
| Top Sectors | Healthcare, Staples | Healthcare, Staples, Discretionary |
| Bottom Sectors | Real Estate, Tech, Energy | Financials, Communication, Tech |
| Top Subsectors | Machinery, Media/Entertainment, Consumer Staples Distribution | Education, Auto Parts, Leisure Products |
| Bottom Subsectors | Consumer Durables/Apparel, Construction Materials, Steel | Motorcycle, Steel, Environmental Protection |
| Southbound Connect Buys | Meituan (Moderate), Guotai Junan (Small) | |
| Southbound Connect Sells | Tencent (Large), Alibaba, Kingsoft Cloud, Pop Smart, SMIC (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.23 |
| Communication Services | 9 | -0.08 |
| Consumer Discretionary | 28 | -0.25 |
| Consumer Staples | 13 | 0.2 |
| Energy | 6 | -0.45 |
| Financials | 24 | -0.2 |
| Health Care | 12 | 0.84 |
| Industrials | 21 | -0.26 |
| Information Technology | 10 | -0.85 |
| Materials | 10 | -0.36 |
| Real Estate | 7 | -2.1 |
| Utilities | 12 | -0.28 |
| Mainland China Listed | 395 | -0.31 |
| Communication Services | 7 | -0.5 |
| Consumer Discretionary | 29 | 0.13 |
| Consumer Staples | 24 | 0.18 |
| Energy | 13 | -0.19 |
| Financials | 64 | -0.53 |
| Health Care | 32 | 0.26 |
| Industrials | 61 | -0.44 |
| Information Technology | 90 | -0.48 |
| Materials | 54 | -0.44 |
| Real Estate | 6 | -0.24 |
| Utilities | 15 | -0.38 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.2 |
| Alibaba HK | 9988 HK Equity | 0.3 |
| JD.com HK | 9618 HK Equity | -0.2 |
| NetEase HK | 9999 HK Equity | -1.1 |
| Yum China HK | 9987 HK Equity | -2.7 |
| Baozun HK | 9991 HK Equity | 2.4 |
| Baidu HK | 9888 HK Equity | 1 |
| Autohome HK | 2518 HK Equity | 4 |
| Bilibili HK | 9626 HK Equity | 1.7 |
| Trip.com HK | 9961 HK Equity | 1.6 |
| EDU HK | 9901 HK Equity | -0.5 |
| Xpeng HK | 9868 HK Equity | -0.7 |
| Weibo HK | 9898 HK Equity | 2.5 |
| Li Auto HK | 2015 HK Equity | 0.1 |
| Nio Auto HK | 9866 HK Equity | -1.9 |
| Zhihu HK | 2390 HK Equity | 0.2 |
| KE HK | 2423 HK Equity | -2.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.4 |
| Meituan HK | 3690 HK Equity | -1.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 0.3 |
| TENCENT HOLDINGS LTD | -0.2 |
| MEITUAN-CLASS B | -1.7 |
| POP MART INTERNATIONAL GROUP | -4 |
| GUOTAI JUNAN INTERNATIONAL | 4.9 |
| XIAOMI CORP-CLASS B | -0.6 |
| KUAISHOU TECHNOLOGY | 2.1 |
| CHINA CONSTRUCTION BANK-H | -0.4 |
| SEMICONDUCTOR MANUFACTURING | -0.4 |
| BAIDU INC-CLASS A | 1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 8.1 |
| ZHONGJI INNOLIGHT CO LTD-A | -2.3 |
| HUADIAN NEW ENERGY GROUP C-A | 125.8 |
| VICTORY GIANT TECHNOLOGY -A | -5.5 |
| EAST MONEY INFORMATION CO-A | -0.5 |
| CHINA NORTHERN RARE EARTH -A | 0.1 |
| CAMBRICON TECHNOLOGIES-A | 4.9 |
| HENGBAO CO LTD-A | 4 |
| LEO GROUP CO LTD-A | -0.3 |
| DAWEI TECHNOLOGY(GUANGDONG-A | 7.2 |
- CNY per USD 7.17 versus 7.17 yesterday
- CNY per EUR 8.34 versus 8.37 yesterday
- Yield on 10-Year Government Bond 1.66% versus 1.66% yesterday
- Yield on 10-Year China Development Bank Bond 1.72% versus 1.71% yesterday
- Copper Price +0.04%
- Steel Price -0.42%
