The "learning effect" has led to capital inflows into A-shares.
A-shares rejected the "Black Monday" scenario, with many market participants predicting this would be another typical "TACO trading" opportunity.
The so-called "TACO trading" (Trump Always Chickens Out) refers to when markets experience significant drops due to policy threats from former U.S. President Trump, investors bet that he will ultimately back down, leading to subsequent market rebounds where investors can profit through buying the dip.
On October 13, A-shares showed resilience against Trump's threat of imposing 100% additional tariffs, opening low but closing higher under the dominance of "buying the dip" funds. The Shanghai Composite Index ultimately fell slightly by 0.19% to close at 3,889.5 points. Driven by Hua Hong Semiconductor (688347.SH) hitting the 20% daily limit, the STAR Market rose 1.4% to close at 1,473 points. Total A-share trading volume reached 2.35 trillion yuan.
A-shares' resilience also stemmed from conciliatory signals released by U.S. Vice President Vance. According to media reports, on the evening of October 12, Vance stated in an interview: "Trump is willing to engage in rational negotiations with China."
Many industry professionals told reporters that market "learning effects" and opportunistic buying during dips resulted in this shock being smaller than the tariff turmoil in April this year. After the adjustment, some individual stocks will present buying opportunities, though investors should also be cautious of risks from high financing amounts in stocks with large gains. Listed companies with better-than-expected third-quarter results are expected to show more outstanding performance in the fourth quarter. In terms of specific directions, hotspots will remain in artificial intelligence, solid-state batteries, domestic software, and other sectors.
A-Share Slow Bull Trend Remains Unchanged
On October 10 local time, Trump posted on social media that the U.S. would impose an additional 100% tariff on Chinese goods starting November 1, along with export controls on critical software. Trump's post triggered volatility in global major asset classes, with stocks, bonds, and currencies all declining, and Chinese concept stocks also experiencing significant drops.
However, after experiencing the impact of "reciprocal tariffs" in April, A-shares on October 13 did not replicate the sharp decline of April 7 this year, instead opening low and closing higher. Many market participants judged this as another typical "TACO trading" scenario.
Wu Zhou, fund manager at Shenzhen Deyuan Investment Co., Ltd., told reporters that Trump's claim about deciding whether to impose additional tariffs on November 1 is most likely pressure tactics before bilateral negotiations to increase bargaining chips. Market declines also present a time window for accumulating quality stocks at low prices. A-shares will continue their own adjustment cycle, and after adjustment, they will welcome a new upward cycle.
Galaxy Securities believes that the expected impact of this round of U.S. tariff threats has significantly decreased, policy stabilization mechanisms are already in place in advance, and the market focuses on medium- to long-term policy expectations. A-shares will still be "self-directed."
Guo Lei, chief economist at GF Securities, believes that since 2018, Trump has imposed additional tariffs on China multiple times. Looking back, the economy and capital markets still have some common empirical patterns: first, tariffs are disruptions in hindsight, and the global competitiveness of Chinese manufacturing is difficult to contain and replace; second, when facing external shocks, capital markets generally experience a one-time "provision" followed by a "reversal" from event moderation and "hedging" from policy warming; third, relative to external disruptions, the safety margin of assets themselves is a more important pricing factor.
Hu Kunchao, investment manager at Cheese Fund, told reporters that this round of tariff conflicts has less market disruption than in April, mainly because the market's "learning effect" is strong, having already rehearsed a round in early April. Tariff policy is a tool, not an objective, and the probability of future moderation is relatively high. Additionally, current market confidence is generally better than in April, and the scope of tariffs this time is also smaller than in early April, making the impact relatively controllable and predictable.
Deng Lijun, strategy analyst at Huajin Securities, stated that from a long-term perspective, the A-share slow bull trend remains unchanged: first, current earnings may continue to recover structurally, and the long-term earnings trend is still influenced by China's own economy and policies; additionally, credit may continue to repair, and valuations may remain at relatively high levels. From a short-term perspective, A-share adjustment amplitude is limited, and adjustments under the slow bull trend are opportunities for low-position layout. From a macro perspective, Deng Lijun noted that medium- to short-term macro liquidity continues to be loose, China's central bank may increase capital injection, and the Federal Reserve's continued rate cuts in October are highly probable.
Li Qian, investment advisor at Huiyan Zhitou Technology Co., Ltd., said this tariff friction is different from April's. April involved official U.S. government information, while October's mainly came from Trump's social media statements, which indeed had a short-term impact on the market, but the impact was limited. Additionally, in April, the market's financing positions were small, and the overall situation was in a oscillating consolidation process; October represents a continuation of the bull market's main upward wave. With daily trading volumes maintaining around 2.5 trillion yuan, capital inflow into the entire market is relatively obvious. The news of Trump's additional tariffs causing short-term adjustments presents a capital buying opportunity.
Third-Quarter Reports Will Dominate Future Trends
From October 13's market performance, semiconductors, non-ferrous metals, domestic software, and other sectors were the main contributors supporting the market rebound, with the STAR Market even turning completely positive. Some industry professionals believe that individual stocks with excessively high financing ratios need to be watched carefully. Going forward, third-quarter reports will dominate more individual stock trends. However, overall, market hotspots won't change significantly. Traditional industries currently don't have great opportunities, and the medium- to long-term dominance of technology growth will continue.
Financing balance on October 10 was 2.4257 trillion yuan, compared to 1.84 trillion yuan on April 7, 2025.
A Guangzhou private equity professional told reporters that investors should currently pay attention to risks in some stocks with high financing balances and can appropriately engage in "high-low switching." After third-quarter report disclosures, some stocks with better-than-expected performance are expected to show a "strong get stronger" situation.
Will the market see style rotation? Li Qian predicts that market hotspots won't change significantly, still centered on artificial intelligence and "anti-involution" themes. Consumption and infrastructure sectors temporarily have no capital inflows, and performance hasn't shown significant growth. Short-term switching may occur within the same sector through "high-low cutting."
Deng Lijun stated that the technology growth-dominant style may shift to balanced in the short term but remains unchanged in the medium to long term. First, short-term U.S.-China trade friction risks are rising, external events have some suppression on technology growth, and TMT trading volume proportion and valuation percentiles are both relatively high. The technology growth-dominant style may shift toward balance in the short term. Second, policy support for artificial intelligence, robotics, and industrial upward trends remain unchanged in the medium to short term. Under the central bank's loose cycle, domestic and international liquidity will most likely maintain looseness in the medium to short term, keeping the medium- to long-term technology growth dominance unchanged.
Hu Kunchao believes that current financing balances are higher than in early April but still within a controllable range, with no obvious risks visible yet. However, at the individual stock level, small-cap stocks overall have higher financing balances and may be relatively more affected by market volatility. The fourth quarter has historically been prone to style changes. Under current circumstances, previously strong sectors like technology semiconductors, non-ferrous metals, and energy storage, despite large gains and some valuation increases, haven't seen changes in industrial logic and continue to have catalysts for support. On the other hand, low-position sectors like domestic traditional consumption haven't seen fundamental changes. Even if funds engage in high-to-low switching to avoid risks, sustainability remains to be verified. Whether market style will change requires continuous evaluation.
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