The stock market showed strong signs of recovery today, with the ChiNext Index rising over 3%, reclaiming losses from the previous day and signaling renewed investor confidence. Despite ongoing sectoral divergence, key growth themes such as lithium batteries, rare earth magnets, and CRO rebounded sharply, driving broad-based gains across growth-oriented equities. The rally was led by a powerful resurgence in the lithium battery sector, which once again acted as the backbone of market sentiment.
Morning Market Overview
The ChiNext Index climbed more than 3% in early trading, fully offsetting yesterday’s sharp decline and forming a bullish engulfing pattern on the technical chart. While overall market breadth remained balanced—with roughly equal numbers of advancing and declining stocks—sector rotation continued to define trading dynamics.
Lithium battery-related stocks ignited a wave of buying momentum, with multiple names hitting涨停, including Rongbai Technology, Shanshan Co., Gotion High-Tech, and Shengxin Lithium Energy. The sector’s index not only erased yesterday’s indecisive "spinning top" candle but also reached a new all-time high, underscoring its resilience and leadership role in the current market environment.
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Conversely, traditional heavyweights like coal and oil underperformed, reflecting persistent capital rotation from value to growth sectors. Among the top gainers were salt-lake lithium extraction, CRO (Contract Research Organization), rare earth magnets, and phosphorus chemicals, while Hongmeng OS, coal, agriculture, and digital currency lagged behind.
Market breadth revealed 83 stocks gaining more than 9%, with 21 on the ChiNext board. A total of 40 stocks hit涨停 (excluding ST-designated and unopened IPOs), with an impressive 78% success rate in maintaining their upward limit. Only four stocks achieved consecutive涨停, including Lidi New Material (non-ferrous metals), Shengjian Environment (new listing), Longxing Chemical (chemicals), and Jingxue Energy Saving (registered new stock).
Lithium Battery Sector Shines Amid Strong Fundamentals
The lithium battery industry reaffirmed its status as the market's primary growth engine. Key players posted significant gains: Rongbai Technology surged 20%, Jiuku High-Tech rose 17.24%, and Gotion High-Tech hit涨停. This strength is underpinned by robust fundamentals in the new energy vehicle (NEV) ecosystem.
According to data released by the Ministry of Public Security, as of June 2021, China’s NEV ownership reached 6.03 million units, accounting for 2.1% of total vehicle registrations. Pure electric vehicles made up 81.7% of this total, with 4.93 million units on the road. In the first half of 2021 alone, 1.103 million new NEVs were registered—a year-on-year increase of 234.9% and a record high for the period.
This surge in demand has directly boosted upstream lithium materials. Most leading lithium battery material producers operated at full capacity during H1 2021, and industry-wide demand is expected to remain strong through the second half of the year.
Rare Earth Magnets Extend Gains on EV Demand Recovery
The rare earth magnet sector extended its rally for a fourth consecutive session, demonstrating strong institutional interest even during broader market corrections. Notably, when the market plunged last Friday, rare earth stocks were among the first to show resilience—highlighting their strategic appeal to active capital.
Core players such as Northern Rare Earth, Minmetals Rare Earth, and Chenghe Resources maintained solid uptrends. Historically, rare earth prices have been volatile due to policy-driven shocks. However, Q2 2021 saw a price correction triggered by temporary declines in auto production linked to global chip shortages.
Yet recent data indicates a strong rebound: May 2021 NEV sales hit 210,000 units, up 159.7% year-on-year—the highest May sales volume on record. As automakers resolve supply chain bottlenecks, demand for rare earth materials used in electric motors is set to accelerate further.
Biotech and CRO Stocks Stage Comeback
Biopharmaceutical equities rebounded sharply after a recent selloff, with major names like Mindray Medical, WuXi AppTec, and Aier Eye Hospital gaining over 6%. Others including Xinhua Pharma, Gongdong Medical, Yuyue Medical, and Hao Hai BioTech followed suit.
The earlier downturn was triggered by a draft guideline issued by the Center for Drug Evaluation (CDE) under China’s National Medical Products Administration—titled Guiding Principles for Clinical Development of Anti-Cancer Drugs Based on Clinical Value. Initially interpreted as tightening drug approval standards, it sparked concerns about reduced R&D profitability for CRO firms.
After a broad-based correction that impacted not just CROs but also other high-valuation consumer and medical growth stocks, sentiment had bottomed out. With many overvalued names undergoing necessary corrections, the sector now appears poised for technical recovery.
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Technical Outlook: Structural Growth Continues
Today’s rebound shattered bearish expectations of a mid-trend breakdown following yesterday’s 100-point plunge in the ChiNext Index. While last session’s drop triggered panic—especially as major growth sectors collapsed simultaneously—the strong intraday recovery laid the groundwork for today’s rally.
Historically, each major pullback in the ongoing ChiNext bull run has tested long-term trend support before reversing higher. This time is no different. The primary drivers remain consistent: lithium batteries, semiconductors, and solar photovoltaics.
Notably, today’s strength in lithium batteries helped lift other pressured sectors—such as chips—which had initially fallen sharply but managed to reverse course mid-morning. This inter-sector correlation confirms that institutional capital continues to rotate within core innovation themes rather than exiting them entirely.
However, investors should remain cautious: the market appears to be entering a phase of selective consolidation. The broad-based “rising tide” phase may be over, giving way to tighter focus on top-tier leaders within each theme.
FAQ Section
Q: What caused the recent rebound in lithium battery stocks?
A: Strong fundamentals drove the rally—particularly record-breaking NEV sales and registrations in early 2021. Upstream lithium material suppliers are operating at full capacity, supporting earnings visibility and investor confidence.
Q: Is the rare earth sector rally sustainable?
A: Yes—while historically volatile due to policy shifts, current demand is being driven by structural growth in electric vehicles and green energy tech. With NEV sales rebounding strongly post-chip shortage, demand for neodymium-based magnets remains robust.
Q: Why did CRO stocks recover despite regulatory concerns?
A: After an overextended selloff that dragged down entire growth segments, valuations corrected to more reasonable levels. With panic subsiding and no immediate regulatory enforcement actions, technical rebound became likely.
Q: How should investors approach this market phase?
A: Focus on quality leaders within proven growth themes—especially those showing strong fundamentals and relative strength during pullbacks. Avoid chasing speculative names without earnings backing.
Q: What does today’s market action suggest about future trends?
A: It confirms that core innovation sectors retain strong investor interest. Even during sharp corrections, capital quickly returns to areas like clean energy, semiconductors, and biotech—indicating long-term structural support.
Policy Tailwinds Boost Green Economy
Supportive government policies are adding momentum to green technology sectors. On July 7, China’s National Development and Reform Commission (NDRC) and other ministries jointly issued the “14th Five-Year Plan” for Circular Economic Development. Key measures include:
- Strengthening fiscal and financial support for circular economy projects
- Expanding government procurement of recycled products
- Enhancing tax incentives for resource utilization
- Encouraging green credit, green bonds, green funds, and green insurance
These initiatives directly benefit sectors like lithium recycling, renewable energy infrastructure, and sustainable materials—further reinforcing the investment case for clean tech.
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Conclusion
Today’s market performance reflects a renewed appetite for growth amid improving sentiment and strong underlying fundamentals. The lithium battery sector remains the central pillar of market strength, supported by accelerating NEV adoption and favorable policy conditions. As capital continues to flow into high-growth innovation themes, investors are advised to focus on sector leaders with proven scalability and resilience.
Core Keywords: lithium battery stocks, ChiNext Index, new energy vehicles, rare earth magnets, CRO rebound, green economy, circular economy policy, market recovery