Overview

• Onshore equities added nearly $1 trillion in market value over the past month, the Shanghai Composite reached a decade high, and the CSI 300 is more than 20% above its 2025 low.
• Key price gauges remain weak, with July consumer prices flat, producer prices falling for a 34th straight month, and the GDP deflator still negative.
• The advance is being fueled by cash-rich investors reallocating to equities in a low-yield environment, and recent gains have broadened across the market.
• Outstanding margin debt is about 2.1 trillion yuan, close to the 2015 peak of 2.3 trillion yuan, prompting comparisons with that boom-bust cycle.
• Nomura warns of “irrational exuberance” and TS Lombard describes a standoff between market bulls and macro bears, as Beijing maintains a measured policy stance and strategists avoid sectors squeezed by deflation and fierce competition.