Shrinking Volume and Divergence: Where Does A-Shares Go Next?

On November 9, A-shares opened higher in the morning session before fluctuating downward, with the index and sector trends diverging.

AI chips, consumer electronics equipment, and robotics sectors strengthened, while power equipment and Kirin battery sectors led the declines.

A total of 3,148 individual stocks closed lower on the day, with overall market gains and losses remaining mild, and trading volume falling back below 1.5 trillion yuan.

Interviewed experts stated that the policy bottom has now been clearly established, A-shares possess a foundation for a rebound, and the market is likely entering a phase of consolidation and bottom-building, where investors can position on dips and await subsequent recovery momentum.

However, the sustainability of the tech stock rebound still requires further verification from fundamentals and incremental capital, and balanced allocation is recommended at this stage.

Volume Falls Short of 1.5 Trillion Yuan

On the index front, the Shanghai Composite Index rose 0.32% to close at 3,660.79 points, while the ChiNext Index fell 0.27% to close at 2,458.56 points.

The CSI 300, SSE 50, and STAR 50 edged slightly higher, while the Beijing 50 rose nearly 1%.

In terms of volume, combined turnover across the Shanghai, Shenzhen, and Beijing markets shrank by 177.1 billion yuan from the previous day, falling back to 1.49 trillion yuan.

Leverage funds cooled overall; although activity recovered somewhat during last week's rebound phase, it still fell short of the year's peak.

As of November 6, the balance of margin financing and securities lending across the three markets dropped to 2.28 trillion yuan, accounting for 2.54% of A-shares' free-float market capitalization.

At the sector level, among the 31 Shenwan primary industries, 14 closed higher.

Coal rose nearly 3%, while telecommunications, defense and military industries, banking, and electronics edged up.

Unitree Technology surged over 9% to 716 yuan per share, and Sunway Communication rose nearly 13%.

Power equipment, real estate, and beauty care fell more than 1%.

Sungrow Power Supply dropped over 5% to 77.85 yuan per share, and CATL fell more than 2% to 248.64 yuan per share.

How should today's A-share performance be interpreted?

Jia Xiaolong, Director of the Research Institute at Heiqi Capital, believes that today's A-share pullback after opening higher with shrinking volume and divergence reflects cooling willingness to chase gains, but the overall mild sector moves do not signal a weakening trend.

Rather, it represents a normal rebalancing as capital shifts from chasing high-beta targets to examining fundamental quality.

The strength in coal and telecommunications versus weakness in power equipment, real estate, and beauty care essentially reflects repricing among high-dividend assets, industrial trend tracks, and demand recovery themes.

Whether the rally can sustain ultimately depends on orders, cash flow, and return on capital levels, not conceptual hype.

Market Bottom Confirmed

A-shares rebounded for multiple consecutive days last week.

When will a trend reversal arrive?

He Jinlong, General Manager of Youmeili Investment, judges that the market has entered a bottom range, with attractive valuations and support on the earnings side, but it remains in a phase of repeated bottom-testing, and conditions for a trend reversal are not yet fully mature.

Short-term consolidation and divergence are likely, with key signals to watch including the year-end Central Economic Work Conference, US Treasury yields, and trading volume.

Zhang Pengyuan, a researcher at PaiPaiWang Wealth, told reporters that market risk appetite has recovered somewhat, with clear divergence between growth and value styles.

Going forward, attention should remain on policy effects, corporate earnings recovery, and the transmission of overseas tech asset volatility.

Analyzing recent A-share price and volume performance, Liu Yan, Trading Director at Honghan Investment, believes that with last Wednesday's strong market rebound, the market bottom is likely confirmed.

On that basis, volume has failed to expand sustainably, reflecting strong wait-and-see sentiment among off-market capital.

From the perspective of volume and rotation structure, the market is likely entering a phase of consolidation and bottom-building, and positioning on dips to await subsequent recovery momentum is recommended.

Discussing the impact of domestic and external environments on A-shares, Fang Lei, Deputy General Manager of XingShi Investment, believes that domestic external pressures are expected to ease marginally, and combined with the gradual normalization of capital market stabilization mechanisms, the policy bottom has emerged.

Meanwhile, A-shares' overall valuation has compressed to reasonable levels with significantly improved cost-effectiveness, and conditions for a rebound are in place.

However, changes in US AI policy expectations, the Fed's rate hike pace, and the US-Iran conflict situation remain uncertain and require continued monitoring.

Jia Xiaolong also provided supplementary analysis from domestic and external factors and the capital front: domestically, the key is to observe whether policies on stabilizing growth, expanding domestic demand, and capital markets can form synergy to convert liquidity into credit expansion and earnings improvement.

Overseas, close attention should be paid to major central banks' rate paths, the dollar and US Treasury yields, and geopolitical conflicts' impact on risk appetite.

On the capital front, watch whether turnover can re-expand and whether institutions and active capital can form consensus, while guarding against shrinking-volume rebounds and sentiment-driven chasing amplifying volatility.

Balanced Allocation Amid Rotation

Market focus has fallen on the sustainability of the tech stock rebound.

Zhang Pengyuan believes this still requires further verification from fundamentals and incremental capital.

Investors can continue to monitor the industrial trends and earnings realization of tech growth sectors, while also considering large-cap value, dividend, and other low-correlation assets, avoiding over-concentration in a single style and maintaining portfolio balance amid market volatility.

Fang Lei believes balanced allocation and holding leaders remains the superior choice.

Tech growth leaders driven by the prosperity cycle have seen their chip structure clearing enter the mid-to-late stage, and short-term selling pressure may be relatively limited.

Traditional industry core leaders with low valuations and stable operations are also beginning to see repricing in an environment of low interest rates and incremental capital preference.

He Jinlong recommends a barbell-style balanced approach, avoiding one-directional bets: use high-dividend, stable-cash-flow assets as the portfolio's ballast in the base position; layer tech exposure in the offensive position, prioritizing earnings realization and domestic substitution directions, while waiting for right-side signals in high-beta overseas computing power chains; and diversify with gold, cyclicals, and turnaround-type consumer plays.

Mingyu Asset recommends attention to AI applications, new energy, robotics, commercial aerospace, and military industries, while also watching select domestic consumption benefiting from policy support, as well as the agricultural sector undergoing capacity clearing and affected by El Niño.

In Jia Xiaolong's view, the faster the sector rotation, the more holdings must adhere to the discipline of "core stays steady, satellite stays grounded, pace is not chased."

Use directions with high earnings certainty, stable cash flow, and benefits from new quality productive forces and domestic demand recovery as the base position, while also covering high dividends, advanced manufacturing, and the digital economy, avoiding betting the portfolio on a single style.

It is also worth noting that domestic policy positioning determines industry trajectory, while overseas liquidity and geopolitical risks affect valuation elasticity.

When either changes, industry weights and risk exposure should be reviewed, and market sentiment should not be allowed to lead investors astray.