The wealth effect in A-shares has re-emerged, igniting market enthusiasm with continuously expanding trading volumes. On August 13, the A-share market rallied sharply with heavy trading, as the Shanghai Composite Index closed up 0.48% at 3,683 points, successfully breaking last October’s high and reaching its highest level since mid-December 2021. The daily turnover of A-shares exceeded 2 trillion yuan for the first time since late February this year.

Subsequently, the turnover climbed to 2.3 trillion yuan on August 14 and 2.24 trillion yuan on August 15. On August 18, the combined turnover of the Shanghai and Shenzhen markets reached 2.76 trillion yuan, an increase of approximately 519.551 billion yuan from the previous trading day. Specifically, the Shanghai market recorded a turnover of 1.13 trillion yuan, while the Shenzhen market reached 1.63 trillion yuan.

Historically, A-share turnover has exceeded 2 trillion yuan on 28 trading days, concentrated in three key periods: May-June 2015, September-December 2024, and February and August 2025.

Meanwhile, margin financing balances have also repeatedly surpassed the 2 trillion yuan mark. Sui Dong, a researcher at PaiPaiWang Wealth, attributes the recent surge in A-share turnover above 2 trillion yuan to improved market conditions and a noticeable wealth effect, which have attracted retail investors and rapidly increased margin balances. Additionally, institutional positions were previously low but have recently seen net inflows, with leveraged funds, quantitative private equity, hot money, and some institutional capital actively driving up A-shares. Furthermore, continuous positive policy signals have bolstered market confidence, prompting frequent trading and collectively boosting turnover.

With fresh capital inflows, A-share indices have soared. On August 18, the Shanghai Composite Index closed above 3,700 points for the first time, at 3,728.03 points, up 0.85%, after hitting an intraday high of 3,745.94 points—breaking the 3,731-point resistance level to set a decade-high. The Shenzhen Component Index rose 1.73%, and the ChiNext Index gained 2.84%, both surpassing last year’s "September 24" highs and setting new annual records. The standout performer was the BSE 50 Index, which surged 6.79% on August 18, bringing its year-to-date gain to 51.92%, a historic high.

Rising indices have spurred accelerated capital inflows. According to Shanghai Stock Exchange data, A-share new account openings in July reached 1.9636 million, up 317,200 from June’s 1.6464 million—a nearly 20% monthly increase. As of July 31, total new account openings this year stood at 14.5613 million, a 36.88% year-on-year increase compared to the 10.6379 million in the first seven months of 2024.

After the Shanghai Composite Index broke 3,700 points, bullish sentiment grew. CITIC Securities noted in an August 10 WeChat article that for August, external conditions are expected to remain stable, supporting optimistic market sentiment, while liquidity-driven A-share momentum is likely to continue. However, as listed companies release interim reports, sectors tied to cyclical and domestic demand may face earnings pressure amid incomplete macroeconomic stabilization.

China Galaxy Securities highlighted that accelerating investor entry is a key driver of incremental capital in A-shares. In July, new A-share accounts on the Shanghai Stock Exchange hit 1.9636 million, up 19% month-on-month and 71% year-on-year. The trend of household wealth shifting toward financial assets is clear, and as risk appetite rebounds, spreading wealth effects are fueling sustained capital inflows—a major upward force for the market.

He Kang, an analyst at Huatai Securities, noted that the Shanghai Composite’s record high on heavy volume reflects active trading capital and elevated risk appetite. Short-term surges in the brokerage index are statistically positive, with no risk signals in liquidity or policy. However, midterm report disclosures may impact trading structures. He recommends maintaining higher positions, focusing on: 1) sectors with fundamental support or recent highs, such as AI chains, innovative drugs, defense, insurance in big finance, and "anti-involution" chemicals; and 2) sub-sectors like domestic computing power, AI applications, memory chips in AI, and export-oriented CDMOs in pharma.

Zhang Qiyao’s team at Industrial Securities argued that under national strategic guidance, bolstered by policy support and emerging growth drivers, market confidence and capital inflows are converging to create a "healthy bull market."

The team emphasized that the capital market’s mission now calls for a "slow bull." Thus, indices have risen steadily with declining volatility, nearing historic lows. Despite new highs, most sectors show moderate crowding, avoiding overall overheating. Lower-crowding sectors can absorb capital when overheated areas cool, enabling a "multi-point breakout" rotation across industries and themes. Institutional advantages are also emerging, reinforcing the "slow and healthy bull" cycle. Key focuses include brokerages, AI diffusion, defense, and "anti-involution" plays.