China stocks mixed ahead of trade data as sector rotation intensifies

China's A-share market extended its first four-day winning streak of the second half on August 7, with the Shanghai Composite rising 1.02%, the Shenzhen Component gaining 1.42% and the ChiNext Index adding 1.35% as turnover across Shanghai and Shenzhen reached 2.66 trillion yuan. Wind data showed the Wind All-A Share Index rose 1.43%, fully recovering the sharp decline from July 17 and reclaiming its 250-day moving average, while posting a cumulative weekly gain of 5.37%. The rally was broad, with more than 2,800 stocks advancing, and was underpinned by turnover holding above 2.5 trillion yuan since Wednesday and renewed institutional inflows into technology shares. Wind data showed electronic components, semiconductors and communication equipment each logged four straight days of net institutional inflows this week, with electronic components alone drawing nearly 100 billion yuan. AI hardware was a standout theme, with data from Kaipanla showing 15 related stocks closed at their daily upper limits after as many as 20 hit limit-up intraday. Sector leadership centered on innovative drugs, CRO, PCB-related shares, rare earth permanent magnets and 6G concepts, while information security stocks pulled back. Innovative drug shares gained additional support after data showed China's innovative-drug license-out deals totaled about $99.7 billion in the first half of 2026, roughly double the full-year 2024 figure. BeiGene raised its full-year operating guidance, while RemeGen and Innovent Biologics also reported substantially improved first-half results. Late in the session, Zhongji Innolight abruptly dropped and triggered weakness across the optical-module trio known in the market as Yi-Zhong-Tian, referring to Zhongji Innolight, Eoptolink Technology and TFC Communication, pulling the CPO segment lower and narrowing gains in the ChiNext. Still, the sell-off did not materially spill over into other hot sectors such as PCB, suggesting broader sentiment remained resilient even as investors watched for whether technology shares would need to keep supporting the indexes next week.