The pace of new fund issuance is accelerating even as subscription enthusiasm cools, with the phenomenon of "more products but less money" raising questions about where capital is flowing. As soon as the long holiday ended, fourth-quarter capital allocation got underway, and the public fund issuance market quickly picked up speed. On the first trading day of October, 20 new funds simultaneously opened for subscription, firing the opening shot of fourth-quarter issuance. Throughout the month, more than 100 fund products are queued for launch, with equity-focused products accounting for over 60%. Overall, extreme sector-specific bets are receding, replaced by keywords such as "balanced," "value," and "steady."
In contrast to the warmth on the issuance side, the A-share market saw a pullback on the first trading day after the holiday, with major indices broadly declining. The market staged a sharp high-low rotation, as technology sectors retreated significantly while defensive and pro-cyclical directions such as banking and shipping bucked the trend and gained ground. Industry insiders believe that "earnings verification" and "style rebalancing" are the two most likely main themes to persist going forward. Yang Gang, chief economist at Golden Eagle Fund, told Yicai that the overseas technology recovery during the National Day holiday and improved domestic policy expectations are both conducive to correcting the cautious sentiment in A-shares before the holiday, but sustainability still needs to be jointly verified by a recovery in trading volume and third-quarter earnings delivery. He recommended maintaining a balanced strategy over the medium term.
20 Funds Launch Together on First Post-Holiday Day
Just after the long holiday, the fund issuance market pressed the fast-forward button. On October 8, the first trading day after the holiday, 20 new funds across the entire market (counting only initial funds, same below) opened for subscription on the same day, firing the first shot for the fourth-quarter issuance market. In terms of the debut-day composition, the "equity content" was quite high — besides 15 equity funds, there were also 3 hybrid secondary bond funds. This wave of debut enthusiasm is merely the beginning of the October issuance window. According to disclosed issuance schedules, another 80 new funds are currently queued for issuance this month, with October 12 being an even more concentrated time point, when as many as 51 products will enter their subscription periods on a single day.
Looking at the full month, equity products including stock funds and mixed funds occupy the mainstream, with issuance numbers accounting for over 60%. Notably, the previously highly concentrated sector-focused style continues to loosen, further spreading toward dividend, cyclical, and other directions. On one hand, institutions still maintain positions in the technology growth direction they previously adhered to, mainly involving battery, chip, robotics, and other sub-sectors, but the number has decreased significantly. On the other hand, institutions are shifting their allocation approach toward a more balanced playbook — the dense appearance of keywords such as "balanced," "value," and "steady" in new product offerings is representative of this. At the same time, directions such as healthcare, grain, non-ferrous metals, livestock farming, and banking are also covered.
The heat of issuance is also reflected in the lineup of fund managers. Several well-known fund managers have new products this month, such as Zhao Yi, who recently became deputy general manager of Quanguo Fund, Liu Tingyu, who manages the largest gold stock ETF, Tang Xiaodong, co-general manager of the macro strategy department at Southern Fund, and Su Wenjie, an active equity fund manager managing over 10 billion yuan.
In contrast to the bustling schedule is hesitation on the capital side. Looking at the first three quarters, public fund institutions are accelerating product deployment, but the willingness of capital to enter has weakened. Wind data shows that based on fund establishment dates, 1,387 new funds were issued during the year, an increase of nearly one-quarter compared to the same period last year, but the overall scale decreased by 200 million units. Breaking it down by quarter, the "more quantity but weaker fundraising" situation becomes clearer. In the third quarter, the number of newly issued funds reached 513, an increase of 14 from the previous quarter, while total fundraising shares decreased by over 25% quarter-on-quarter. The average issuance size per quarter was 452 million units, refreshing the quarterly low since 2019. Meanwhile, the number of fund products that extended their fundraising periods in the first three quarters reached 233, 1.8 times the level for all of last year, with market fundraising difficulty continuing to climb.
The supply side is stocking shelves while the demand side is clutching wallets. Industry insiders believe that the rising number of new fund issuances is fundamentally the result of fund companies actively seizing tracks, improving product lines, and solidifying market positioning. The continued weakening of issuance scale and significantly extended fundraising periods directly reflect cooling investor willingness to enter and a market risk appetite trending conservative. Frontline distribution channels confirm this, with many practitioners saying that "fundraising conditions in this year's new issuance market are not particularly good." A marketing department staffer at a medium-sized fund company explained that market rotation is frequent, investor risk appetite has declined, and combined with mediocre performance of older products and concentrated supply of new funds, the fundraising quota for individual products has been diluted.
Combined with the market environment, the focus of product design has shifted accordingly. "Fixed-income plus" products that balance return elasticity with volatility control have become a consensus direction for steady deployment among fund companies. There are already 36 hybrid secondary bond funds, partial-debt hybrid FOFs, and partial-debt hybrid products planned for issuance in October, while in the just-passed September, 63 such new products were established, setting a new single-month record for the year.
Defensive Directions Buck the Trend
In contrast to the warmth on the issuance side, on the same day, the money-making effect was poor, with all major A-share indices closing lower. As of market close, the STAR Composite Index plunged 4.55%, while the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index fell 0.79%, 2.07%, and 3.15% respectively, with over 3,700 individual stocks declining. On the board, technology directions such as semiconductors, optical modules, and communication equipment came under pressure, with Yuanjie Semiconductor Technology Co.,Ltd. (ASX: 688498) and Suzhou Dongshan Precision Manufacturing Co.,Ltd. (ASX: 002384) hitting the daily limit down. Defensive and pro-cyclical directions such as banking, shipping, and coal bucked the trend and gained, with China Merchants Port Group Co.,Ltd. (ASX: 001872) and Bank Of Suzhou Co.,Ltd. (ASX: 002966) reaching historic highs.
"The market is showing a clear high-low rotation," a Great Wall Fund investment research staffer told Yicai. The decline on the first trading day after the holiday is closer to valuation clearing and chip rebalancing, but valuation clearing itself can be quite dramatic. In the short term, it is more likely to be a tug-of-war with high volatility and structural divergence, and may continue to fluctuate. Regarding the decline in the technology sector, the investment research staffer believes that on one hand, the pressure from sentiment and chips is real and not small in magnitude; on the other hand, demand orders for optical modules still exist in the short term, but FCC regulatory pathways, optical chip price fluctuations, and weakening overseas optical communications have disturbed the most optimistic long-term expectations.
"Investor risk appetite has clearly contracted, reflecting that capital still leans toward defensive allocation amid market volatility," Yang Gang said. For A-shares, fundamental support comes more from stable policy expectations rather than rapid earnings improvement, and the market may continue its structural行情. In the view of interviewees, excessive pessimism is also unwarranted at this point. The aforementioned Great Wall Fund investment research staffer said, "Because the overseas AI hardware boom is still ongoing, the Nasdaq continues to hit new highs, A-share optical module valuations are about half of comparable US stocks, and after adjustment, crowding in optical communications, semiconductor equipment, and domestic computing power has fallen from high levels. Storage price increases are still continuing, AI computing power order certainty is high — these are conditions for structural repair."
"As the year-end approaches, expectations should also be moderately lowered — that is, under a high base from the third quarter, growth earnings growth faces marginal decline, the probability of a broad-based rally is low, and stock selection matters more than timing," the investment research staffer said. The key anchors going forward are mainly three directions: whether third-quarter earnings can exceed expectations, the evolution of overseas interest rates and optical communication regulatory pathways, and the degree to which storage capacity expansion is realized. He further stated that if earnings are delivered and overseas disturbances ease, structural opportunities remain, but focus should be on directions with earnings certainty and low crowding, such as storage, semiconductor equipment, and domestic computing power. At the asset class level, a balanced or barbell-style combination of technology plus dividends may be a more prudent response.
A China Merchants Fund investment research staffer told Yicai that with the clearing of margin positions and potential stabilizing forces providing support, the downside for the market may be limited, but opening upside space still requires catalysts from incremental industrial narratives or easing of global tightening expectations. Going forward, the short-term barbell strategy is expected to remain dominant. MACD golden cross signals have formed, and these stocks are performing well!
Comments