A-share major indices all closed lower today. As of the close, the Shanghai Composite Index fell 0.6%, the Shenzhen Component Index dropped 0.82%, the ChiNext Index declined 1.62%, the Beijing Stock Exchange 50 fell 0.72%, and the STAR 50 Index rose 0.06%. Total market turnover reached 1,442.1 billion yuan, a decrease of 29.5 billion yuan from the previous day, with more than 3,300 individual stocks declining across the market.
In terms of sectors and themes, data rights confirmation, pork, breeding, cultural media, and IT services led the gains; battery, energy metals, education, graphite electrodes, and baijiu led the declines.
On the trading floor, the data rights confirmation sector opened high and moved higher, with Sanwei Tianxia, Nanwei Software hitting the daily limit up, while Yilianzhong, Digital Authentication, and Century Hengtong were among the top gainers. The pork sector showed active performance, with Dongrui Shares hitting the daily limit up, and Tiankang Biological, Shennong Group, and Juxing Farming leading the gains. The cultural media sector demonstrated strong performance, with Duzhe Media, Publishing Media, Yue Media, and Tianwei Video hitting the daily limit up, while Zhaoxun Media, Fantuo Digital, and Fanli Technology were among the top gainers. The battery sector fluctuated downward throughout the day, with Shidai Wanheng and Shangtai Technology touching the daily limit down, CATL falling more than 12% during intraday trading, and Weilan Lithium Core, Xiandao Intelligent, and Liwang Shares leading the declines. The baijiu sector continued to weaken, with Shanxi Fenjiu, Gujing Distillery, and Luzhou Laojiao leading the drop.
At the index level, overseas markets generally rose while A-shares traded sideways, with stabilization funds providing "support without lifting." Today, after a period of consecutive adjustments, Japanese and South Korean stock markets generally advanced, with South Korean stocks even triggering circuit-breaker-style gains during intraday trading, offering a rare breathing window. However, A-shares did not extend yesterday's upward momentum, opening lower and trending down throughout the day, with accelerated declines in late trading. Based on current trends, it is highly likely that the gains from the 20th and 21st will be given back.
This movement clearly triggered the stabilization mechanism of support funds. Observing the CSI 300 ETF Huatai-PineBridge, which is a key buying target for stabilization funds, a relatively obvious volume-driven rally appeared in late trading, with the Shanghai Composite Index rebounding in a straight line simultaneously. Large funds concentrated buying in late trading suggests this may be a key support level to defend.
It should be noted that apart from the Shanghai Composite Index, the technical patterns of other important broad-based indices such as the Shenzhen Component Index and ChiNext Index have clearly deteriorated, warranting heightened vigilance.
At the sector level, hardware remains relatively weak while software outperforms hardware. It is advisable to pay attention to directions where institutions previously held light positions. Today, driven by the rebound in South Korean stocks, the AI hardware sector collectively surged in early trading. However, this direction is an area of heavy institutional holdings, with substantial trapped positions overhead. Once a rebound occurs, it triggers numerous stop-loss orders. As a result, against the backdrop of South Korean stocks opening high and moving higher throughout the day, the hardware sector came under renewed selling pressure.
Correspondingly, the software direction, where institutions generally held light positions previously, continued to strengthen. According to Tonghuashun data, over the past 10 trading days, the cultural media sector has entered the top gainers list on 4 days, demonstrating good continuity. In the current environment, the importance of chip structure has notably increased. During adjustments, the more crowded a direction was previously, the more likely it is to attract funds seeking to bottom-fish and speculate on rebounds, and the more likely it is to accumulate large numbers of trapped positions. Therefore, one should avoid AI hardware, where institutions hold heavy positions, and seek sustainability in non-heavy-position sectors. Currently, the software direction better meets this criterion.
[Note: Markets carry risks, and investment requires caution. Under no circumstances do the information or opinions expressed in this subscription account constitute investment advice for anyone. Unless otherwise noted, research data in this article is supported by Tonghuashun iFinD.] The author is Wu Zewei, a researcher at Xingtu Financial Research Institute.
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