On December 18, the three major stock indices showed mixed performance. The Shanghai Composite Index opened lower but rebounded, while the ChiNext Index dropped over 2%. At the close, the Shanghai Composite rose 0.16%, the Shenzhen Component fell 1.29%, and the ChiNext Index declined 2.17%.
Sectors such as pharmaceutical distribution, banking, and retail led gains, while batteries and power grid equipment lagged. Nearly 2,900 stocks advanced across the market. The combined turnover of Shanghai and Shenzhen markets reached 1.66 trillion yuan, down 155.7 billion from the previous session.
Notably, despite nearly 4,000 stocks rising intraday, the indices remained divided. This divergence suggests strength in non-weighted or small-cap stocks. The Wind Small-Cap Index, which saw a "hammer bottom" pattern yesterday, surged 1.79% today—its biggest daily gain this month. The CSI 2000 Index also briefly broke through multiple resistance levels before retreating in the afternoon.
If this trend persists, it could signal a "subtle" shift for the market. For instance, most sessions this month have seen more decliners than gainers, with only a few sectors leading rotations. A shift in capital preference toward smaller caps could broaden profit opportunities.
Historically, the Small-Cap Index has rarely fallen for more than three consecutive weeks. Its strong rally from April to August this year marked a lucrative period for many investors. However, sustained recovery hinges on whether small caps can extend gains beyond today.
If today’s rebound was merely a reaction to overnight declines in U.S. tech stocks, short-term trading may revert to rotational plays, emphasizing timing.
Now, the "constants": 1. Brokerages, which rallied with insurers yesterday, again followed their pattern of "trapping buyers the next day." The sector opened slightly higher but trended lower, with only recently resumed stocks like China International Capital Corporation (CICC), Dongxing Securities, and Cinda Securities posting gains.
This isn’t to say brokerages lack upside. Policy-driven industry consolidation—such as mergers between Guolian and Minmetals Securities, Haitong and Guotai Junan—aims to enhance competitiveness and resource efficiency. Yet, brokerages’ post-rally behavior may hint at broader market trends: sustained uptrend or consolidation.
2. A500 ETFs maintained high turnover. The top five A500 ETFs traded 418.39 billion yuan today, slightly below yesterday’s 452.91 billion. Meanwhile, the top four CSI 300 ETFs returned to average volumes after a modest uptick yesterday. Some interpret the A500 ETF inflows as less about market stabilization and more about insurance capital allocation. Regardless, the liquidity supports related indices and constituents.
Sector Highlights: - A new theme, "Reward Economy," emerged. It refers to consumers purchasing affordable non-essentials for instant gratification amid stress. IP-related, trendy toys, and influencer economy stocks rallied, reflecting niche consumer trends. Dongxing Securities noted a shift in 2025–2026 from hype-driven to sustainable business models in new consumption, favoring health, practicality, and emotional spending, alongside smart tech and global expansion. - Pharmaceutical stocks rose on China’s updated医保 (health insurance) drug list, adding 114 drugs (50 innovative). SDIC Securities highlighted consolidation potential in distribution, where China’s top three firms lag the U.S.’s 96% market share. - Commercial aerospace stayed active as China’s reusable Long March 12A rocket prepares for its maiden launch. Huaxi Securities cited cost-cutting via reusability—a trend led by SpaceX—with opportunities in rockets, components, and space computing.
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