The anxiety of yesterday has given way to the fear of missing out today—this captures the mindset of many investors over the past few trading sessions.
On June 8th, the A-share market experienced a broad decline, with the Shanghai Composite Index falling below the 4000-point mark and the technology sector undergoing a significant correction. However, just one day later, the market staged a strong rebound, with the Shanghai Composite Index quickly reclaiming the 4000-point level. Sectors that had led the previous decline, such as semiconductors and AI computing power, posted strong gains. Today, the market seems to be echoing the pattern from two days ago... This jumpy, volatile price action feels like "ultra-sensitive skin," changing even faster than the recent weather.
After such sharp swings, the most pressing questions for investors are often: Can the tech rally continue? What should I do when the market is so turbulent?
Our answer is clear: While short-term movements are difficult to predict, the long-term trend of hard technology remains intact. The STAR 50 Index might just be the right tool for positioning in this tech trend amidst the volatility.
Understanding the Sharp Swings
Let's first review the recent market narrative.
The earlier sharp decline was triggered by external factors. The US May non-farm payrolls data significantly exceeded expectations, causing a sudden surge in market concerns about Federal Reserve interest rate hikes. This, combined with an AI chip sales forecast from a major overseas semiconductor leader that fell short of expectations, triggered a global sell-off in semiconductor stocks. As this data was released after the A-share market had closed, the panic sentiment was concentrated upon market open the following Monday, resulting in a catch-down decline.
The subsequent rebound also had clear catalysts. On one hand, Intel securing an order for over 3 million Tensor Processing Units (TPUs) from Google, and Nvidia beginning to evaluate Intel's advanced packaging and process technologies, boosted market confidence through tech industry collaboration. On the other hand, the latest data showed China's May exports grew by a robust 19.4% year-on-year, exceeding market expectations. The resilience in the economic fundamentals provided a foundation for sentiment recovery, with the previously oversold technology sector leading the rebound.
Why have the recent swings been so rapid?
The main reason is that technology stocks had already accumulated substantial gains, leading to a large amount of profit-taking pressure. Market sentiment was already fragile, making it susceptible to a chain reaction from external shocks. Conversely, once positive catalysts emerge, sidelined capital rushes back in, creating the sharp up-and-down movements.
However, it's crucial to emphasize: the recent market volatility stems more from a confluence of news flow and sentiment, rather than a fundamental reversal in the technology industry's logic. AI computing capital expenditure is still expanding, domestic substitution is moving from "usable" to "effective," and the profitability of hard-tech companies continues to materialize. After short-term disturbances, the long-term direction remains unchanged, and we remain optimistic about the enduring hard-tech theme.
Why the STAR 50 Index is a Strategic Tool
First, it's important to note that the remainder of June is unlikely to be calm. A "Super Central Bank Week" is approaching, with policy meetings from the European Central Bank, Bank of Japan, and the US Federal Reserve poised to influence market nerves. Additionally, US inflation data and US-Iran negotiations could also become sources of volatility.
Furthermore, historical experience suggests that after a single-day drop of over 10% in the Philadelphia Semiconductor Index, the market often undergoes a process of "oversold rebound → secondary bottom → recovery." The short-term market may continue to exhibit a volatile pattern, with a potential window for style rebalancing likely emerging in late June.
For those looking to position in the tech theme during this volatility, the STAR 50 Index could be a useful tool.
Composition Offers Relative Resilience
From an index construction perspective, the STAR 50 constituents are the top 50 companies on the STAR Market by average daily total market capitalization over the past year. As of June 9th, over half of the constituent companies have a market cap exceeding 50 billion yuan.
It can be said that the STAR 50 aggregates the core assets of the STAR Market. These companies have essentially undergone a round of fundamental validation and institutional pricing, with their leadership positions, positions in the industrial chain, profit paths, and domestic substitution trends being relatively clear. During market turbulence, they possess a thicker "safety cushion" compared to smaller-cap companies.
Simultaneously, leading STAR Market companies tend to have a higher proportion of institutional holdings, with investment behavior leaning more towards rational allocation rather than speculation, which can help buffer extreme volatility to some extent.
Historical data shows that in bearish market years, the overall performance of the STAR 50 has generally been better than that of the STAR 100 and STAR 200 indices, demonstrating a degree of defensive quality.
Quarterly Rebalancing Optimizes Holdings
During the development of hard-tech companies, there is significant uncertainty regarding technological roadmap iterations, orders, and clients, leading to an extremely fast pace of iteration among STAR Market companies overall.
While most broad-market indices rebalance semi-annually, the STAR 50 adjusts its constituents quarterly. This allows for the timely inclusion of newly emerged leaders and the optimization of the portfolio composition. Investors need not worry excessively about individual stocks falling behind or technological roadmaps becoming obsolete, as the index rules perform this dynamic screening.
High Industry Concentration in a Robust Sector
As of June 9th, the semiconductor industry (Shenwan secondary industry classification) accounts for approximately 77% of the weight in the STAR 50 Index.
Currently, global AI computing infrastructure is accelerating, with surging demand for expansion in advanced logic chips, High Bandwidth Memory (HBM), and Chiplet advanced packaging. This is directly pulling forward the procurement cycles for key semiconductor equipment like etching, thin-film deposition, cleaning, and metrology. Domestic equipment manufacturers have achieved batch verification for mature process nodes of 28nm and above, with the domestic substitution process for equipment moving from the "usable" to the "effective" stage.
On the other hand, AI computing capital expenditure from downstream cloud providers has risen significantly, driving sustained high demand. However, global semiconductor industry capacity expansion remains relatively slow. Under this supply-demand mismatch, global chip average selling prices continue to rise, potentially signaling the industry's entry into a super-cycle of capacity shortage.
The high景气度 (robustness) of its dominant industry provides the fundamental支撑 (support) for the confidence the STAR 50 Index can offer during periods of volatility.
Navigating Volatility: Patience Over Impulse
A market characterized by sharp swings最容易 (most easily) tempts investors into emotional decision-making. Given the higher elasticity of the STAR 50 Index, we would like to offer a reminder.
Avoid Emotion-Driven Trading
Chasing rallies during sharp upswings can lead to buying at short-term sentiment peaks. Conversely, hastily trying to "buy the dip" during sharp declines can leave one vulnerable to a secondary bottom. Emotion-driven sharp moves often do not signify a change in the long-term direction. Rather than making rushed decisions in extreme market conditions, it may be wiser to wait for market sentiment to stabilize before assessing suitability for one's own strategy.
Consider Dollar-Cost Averaging
For investors看好 (optimistic about) the long-term direction of hard technology, considering a systematic investment plan or分批布局 (phased investment) into relevant already-listed funds can effectively reduce timing risk. Alternatively, direct subscription to正在发行的 (currently issuing) STAR 50 ETFs and their feeder funds is another option.
The market will never be devoid of volatility. The story of急涨急跌 (sharp rallies and declines) may repeat itself in the future. However, short-term turbulence will eventually pass, while the long-term trajectory of hard technology continues to advance. Let's exercise a little more patience and restraint as we await the next sunny day.
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