The National Day holiday saw overseas capital markets stage a scene of "domestic investors on vacation while markets front-run." Driven by AI technology, the Nasdaq and S&P 500 hit record highs once again, while Japan's Nikkei and Taiwan's weighted index in Asia also posted impressive performances. South Korean and Hong Kong stocks, though less robust than the aforementioned indices, still had structural highlights. Tomorrow, A-shares reopen. Specifically, what exactly happened in overseas markets over these past few days? What are the supporting factors? And how will they influence tomorrow's A-share trading?
Overseas Markets: Overall Gains with Localized Divergence
The overseas market performance has consistently featured the AI technology theme as its throughline. In U.S. stocks, as of October 6, the S&P 500 Index and the Nasdaq Composite closed at 7,818.93 points and 27,599.89 points respectively, both setting record highs. From October 1 to October 6, the S&P gained 2.19%, and the Nasdaq rose 2.75%. In terms of sectors, AI technology stocks collectively advanced, with NVIDIA, Amazon, Microsoft, Tesla, AMD, and Broadcom all moving higher. Overnight, NVIDIA's market capitalization briefly approached the $6 trillion mark. Japan and Taiwan stock markets, similar to the U.S. tech-stock-led rally, both benefited from AI technology. Taiwan's weighted index in particular, due to TSMC's heavy weighting and strong gains, has risen over 70% year-to-date, firmly holding the top spot globally. During the National Day holiday, the Nikkei 225 rose 5.89% and Taiwan's weighted index gained 3.93%, both outpacing the S&P and Nasdaq. However, Asian stocks did not bloom across the board. South Korean and Hong Kong stocks were relatively weak. South Korea's market in particular was essentially range-bound, which is puzzling given that it hosts two heavyweight AI memory chip giants, SK Hynix and Samsung Electronics, making it an absolute beneficiary of this round of AI infrastructure buildout. Hong Kong stocks were even weaker, with the Hang Seng Index and Hang Seng Tech Index both declining relative to pre-holiday levels. On one hand, this reflects Hong Kong's long-standing issue of lacking AI chip stocks similar to those in the U.S. market, resulting in a limited ability to absorb U.S. market sentiment—a fundamental factor. On the other hand, the southbound capital channel was closed during the National Day holiday, affecting Hong Kong's capital flows—a liquidity factor. Meanwhile, persistently rising U.S. Treasury yields are not favorable for Hong Kong stocks, which still depend on overseas liquidity. However, the Hong Kong market also has no shortage of structural opportunities. On October 6, the biopharmaceutical sector surged, driven by a 30% jump in U.S.-listed Vaxcyte, with Viva Biotech rising nearly 20% and CanSino Biologics gaining about 13%. In commodities, COMEX gold futures were range-bound, fluctuating mainly between $4,100 and $4,200, while Brent crude remained above $100. Both showed limited price movement, primarily because geopolitical tensions did not further deteriorate.
Supporting Factors Need Close Examination
To understand overseas market movements during the National Day holiday, two key points are essential. First is the AI industrial chain, as it remains the most core pricing anchor for global stock markets. U.S. AI computing power giants, South Korea's AI memory chips, TSMC's advanced processes, Japan's semiconductor equipment and materials—including relevant Chinese supply chain players with global competitiveness (setting aside artificial geopolitical and trade barriers)—continue to benefit from massive global AI capital expenditure, as these expenditures generate tangible profit growth for the companies involved. This fundamental factor is extremely rigid and strong. Although overheating can occur in price action, as long as the pullback is sufficient, capital will readily initiate a new round of rally at any time. NVIDIA's successful climb to a record high after repeated corrections is the best proof. This fundamental factor is also the core reason why stock indices have not collapsed as they did in the past even after U.S. Treasury yields repeatedly broke through ceilings. This is not to say that rising Treasury yields and the global bond selloff have no negative impact—on the contrary, they put significant pressure on corporate valuations. However, the earnings expansion brought to relevant heavyweight companies by massive AI capital expenditure and AI computing infrastructure can effectively offset these negative effects. As long as this massive capital expenditure continues and the profit expansion of related companies remains underway, it can effectively counter macroeconomic, geopolitical, and liquidity-related negatives. From the current news flow, things seem to lean somewhat positive. For example, media recently reported that Musk's SpaceX will raise $40 billion for AI computing power investment, becoming another large tech company increasing its computing capital expenditure. This also proves that the arms race around AI computing power will most likely continue. Morgan Stanley estimates that by 2028, AI infrastructure will require $1.5 trillion in external financing. Although this will trigger increasing debate over whether investment and returns are aligned, and is often criticized by outsiders for causing serious debt risks, it depends on who the counterparty is. For companies benefiting from capital expenditure, earnings growth remains assured, valuation expansion remains strong, and upward stock price momentum remains ample. Second is monetary policy. After the Fed's rate hike in September, the non-farm payroll data released in early October came in far below expectations with a rising unemployment rate, easing the market's prior anxiety about monetary tightening. Combined with no new deterioration in geopolitical tensions and no further sharp rise in oil prices, a rebound rally unfolded accordingly. However, such factors are short-term disturbances, and future trends will depend on later data. On the broad direction, I lean toward believing that inflation needs to be suppressed and that monetary tightening expectations will remain tightening-oriented. Therefore, in the future, investors will see the strong and positive fundamentals of the AI industry continuously tugging against the negative effects of geopolitical tensions, sticky inflation, and monetary tightening policy, in repeated back-and-forth contests. One cannot say which factor will definitely prevail—only that these tugs and contests will cause valuations to expand or come under pressure, and will continuously present volatility-driven investment opportunities. Understanding these two points will make it smoother to assess tomorrow's A-share reopening.
How Will A-Shares Perform Tomorrow?
To summarize in one sentence: based on overseas market performance, macroeconomic news flow, and post-holiday liquidity changes, one can maintain confidence in A-shares when they open tomorrow. One might even, under the positive sentiment from overseas markets and with pre-holiday Shanghai and Shenzhen turnover having shrunk to around 1.45 trillion yuan, look forward to a gap-up open tomorrow. At the sector level, the following lines deserve close attention. First is the technology sector, especially AI computing power, semiconductors, and optical communications. For example, influenced by NVIDIA's fresh record high, the domestic CPO sector—already deeply embedded in NVIDIA's supply chain—having also suffered a notable decline before the holiday due to renewed trade concerns, is worth closely tracking to see whether it can ride NVIDIA's rally and stage a repair rally. Other sub-segments of NVIDIA's supply chain, such as PCB, liquid cooling, and server assembly, where valuations did not surge too high before the holiday, can similarly be expected to see an upward move. However, one should not be blindly optimistic, because domestic CPO companies listed in Hong Kong fell today. If the CPO sector wants to rise tomorrow, it will need strong support from domestic capital. Additionally, even if the CPO sector rebounds, one must remain vigilant against sudden trade restrictions that could deal a blow to valuations and share prices. Therefore, for A-share companies in NVIDIA's supply chain, "long-term view, short-term trading" may be a good strategy. As for other domestic computing power supply chain players, they also have opportunities to ride the optimistic sentiment from NVIDIA's record high and launch a new rally. Beyond AI technology, biopharmaceuticals is also a direction worth close attention. During the holiday, Hong Kong's pharmaceutical sector was active, with Viva Biotech and CanSino Biologics surging. Combined with 31 Chinese company drug studies selected for the ESMO Annual Meeting from October 23 to 27, and expected catalysis from the Nobel Prize, the innovative drug sector may usher in periodic opportunities. Sub-directions such as CXO, ADC, and vaccines can all be closely watched. As for traditional sectors, such as the real estate chain and consumption chain, many favorable policies were already released before the holiday—mortgage interest subsidies and trade-in programs—leading to expectation-driven rallies. Whether they can rise further tomorrow will require validation from relevant data during the National Day holiday. Notably, during the holiday, Hong Kong's real estate sector showed volatile performance with significant internal divergence, including companies like Shimao and R&F that surged dramatically, as well as China Resources Land and Vanke with smaller fluctuations. The consumption sector overall showed weak volatility with little in the way of a rally, likely also waiting for holiday statistical data. Having discussed directions that may perform well, one also needs to be wary of sectors that may come under pressure, such as high-dividend and dividend-focused sectors. After the AI memory sector entered a correction in July, some capital flowed into high-dividend and dividend sectors for rotation, manifesting as decent gains in some power stocks, utility stocks, and bank stocks. But if capital rotates back to AI technology after the holiday, these defensive funds that moved early will likely rotate back into tech growth. Additionally, with the third-quarter earnings disclosure window opening, some companies already issued profit warnings before the holiday, and negative impacts may be concentrated after the market opens. Furthermore, some theme stocks that were wildly speculated over the past two months due to the market's lack of clear direction—if overall market volume is insufficient, capital will prioritize directions with earnings support or clear external catalysts, and pure theme-speculation stocks may face corrections. On the capital flow front, the direction of northbound capital on the first day after the holiday also needs attention. If U.S. Treasury yields remain elevated, northbound capital may continue its pre-holiday outflow trend; if the dollar index retreats, northbound capital returning would provide additional support for A-shares. After the southbound channel reopens, domestic capital's absorption capacity for Hong Kong stocks is also worth observing, as this will indirectly affect sentiment in related A-share sectors.
Conclusion
In summary, during the National Day holiday, overseas markets front-running provided sentiment support for A-shares' post-holiday opening, but one should not ignore A-shares' own rhythm. For investors, one can remain optimistic before the open, but after the open, it is necessary to switch to observing specific signals: whether volume expands, the direction of northbound capital flows, and whether leading sectors have sustainability—because these signals will determine whether the market delivers a strong open, a sustained recovery, or a gap-up followed by a fade back into range-bound trading. Overall, the stock market is still dominated by structural opportunities, with no broad-based gains across the board. The core determinant of whether stocks rise or fall still depends on the tug-of-war among companies' own earnings growth, economic fundamentals, policy direction, and liquidity.
(Full text ends) ▍Past Reviews Gelonghui Statement: The views in this article are from the original author and do not represent Gelonghui's views or positions. Special reminder: Investment decisions should be based on independent thinking. This article is for reference only and does not constitute any actual operational advice. Trading risks are borne by the individual.
Comments