The recent sharp swings in the market have been particularly nerve-wracking for investors, with the technology sector experiencing a dramatic pullback. Stocks that were leading gains just a day prior have plunged into deep corrections overnight.
This volatility has been especially pronounced in certain sectors. The commercial aerospace sector, for instance, surged over 8% one day only to see widespread limit-down moves the next, on July 13th. The semiconductor sector followed a similar pattern, swinging violently from collective surges to concentrated sell-offs within two days, prompting investors to quip about the market's whipsaw nature.
Following a single-day surge of 8.41% by the STAR 50 Index that nearly reached a record high, the market gave back those gains over the next two sessions. High-valuation, high-turnover, and purely thematic stocks remained under pressure, as market tolerance for "grand narratives" visibly diminished, prompting a reassessment of the certainty behind every rally.
At this critical juncture, key questions have emerged: Is the concentrated rally in tech stocks undergoing a temporary unwinding or a shift towards internal differentiation? How are deleveraging risks in South Korea transmitting to the A-share tech ecosystem? Concurrently, dividend sectors like banking and coal have once again become safe havens, with some market participants noting a newfound resilience. How will market style evolve from here? Several fund houses have promptly offered their analyses.
South Korean Deleveraging Accelerates, Spreading Risk-Off Sentiment
The catalyst for the market's deep correction on July 13th was not a single factor. Disappointing earnings from SK Hynix, renewed uncertainty in US-Iran tensions, and rising investor risk aversion collectively dampened appetite for risk assets. However, what triggered heightened alert among A-share investors in the afternoon was a research report from an overseas team of a securities firm regarding "retail deleveraging in the South Korean stock market."
The report suggested that South Korean retail investors' purchasing power for tech stocks is exhausted, with overall available retail funds down about 20%, and the flow of funds from banks to securities firms has stalled. Furthermore, the transmission channel of Korean leverage to US tech stocks is clear; a second acceleration in Korean deleveraging would synchronously shrink marginal buying for related stocks.
This assessment finds support in local Korean data. According to recent Korean media reports, South Korea's five major commercial banks have already utilized over 85% of their annual household loan growth quotas for the first half of the year, with two banks having exceeded their full-year regulatory limits. With new lending capacity for the second half nearly depleted, the market widely anticipates an impending "cliff-like contraction" in domestic credit. Leveraged funds that previously flooded into the stock market via bank loans now face pressure from passive contraction or even forced exits, abruptly cooling the once-hot leveraged market entry trend.
Hwabao WP Fund Management noted that the direct catalyst for Korea's leverage risk might be SK Hynix's US listing, prompting institutions to shift holdings from the original Korean-listed shares to the US-listed ADR version better suited for US trading, leading to structural repositioning that pressures Korean shares while pushing the Korean won to a near one-month high.
Under this dual pressure, the South Korean stock market suffered heavy losses, becoming the "hardest hit" in the Asia-Pacific region. The benchmark KOSPI index's decline widened to 9%, triggering circuit breakers twice intraday, with the exchange urgently activating the SIDECAR mechanism to halt programmatic selling to stabilize the market. Heavyweight tech stocks plunged, dragging the KOSPI below the 7000-point level to its lowest since May 6th. This intense volatility in external markets quickly transmitted to A-shares, further pressuring the already highly volatile tech sector.
Is the Fund "Crowding" Loosening or Merely a Structural Shift?
Recently, high volatility in the tech sector has been evident, particularly in the ChiNext and STAR Board indices. The ChiNext Index's monthly chart showed a bearish engulfing pattern for the first time since September 2024, with both indices rapidly seeing large bearish candles engulf prior large bullish ones—a technical structure rarely seen in recent years.
The batch of limit-down moves in memory chip stocks like Shannon Semiconductor and GigaDevice raised concerns about "crowded" trades. However, fund houses do not view this as the end of capital concentration.
Hwabao WP Fund Management believes short-term赚钱效应 remains tied to tech, with the sector's sustained buying determining the market's direction. While some capital seeks opportunities in lower-priced sectors, no sustained style shift is evident. Sectors like commercial aerospace and software, which benefit from tech capital overflow, get "siphoned" by tech funds during rallies and sold by "crowded funds" during declines.
Jin Xin Fund pointed out that the current tech stock pullback is more a cooling of trading sentiment than a reversal of industrial logic. Demand for AI computing power continues to grow, and areas like domestic computing power, storage, and semiconductor equipment/materials remain within the major trends of industrial upgrade and import substitution. The recent adjustment, following significant gains and increased trading crowding amid external volatility and liquidity disturbances, is a normal market phenomenon.
Despite rising trading拥挤度, most fund houses agree that, in the long term, the overall major peak of this tech cycle may not have arrived yet. The domestic substitution sector may still face profit-taking pressure after a rebound, potentially entering a narrow-range, high-level consolidation after finding lower support.
Another fund house noted that increased recent market volatility, prone to sharp swings, essentially reflects an imbalance between bullish and bearish forces. The narrative tug-of-war and external deleveraging have dried up buying interest; tech may need to await the next stronger narrative to revise expectations upward and attract more buyers.
Notably, some analysts emphasize that "crowded funds" are unlikely to exit tech entirely, but the listing of a major memory player could create a capital "siphoning" effect within the sector, leading to internal differentiation. For example, on July 13th, while stocks like GigaDevice, BIWIN Storage, and Longsys fell over 10%, SeaStar Medical Holding Corporation surged over 13% intraday to a record high, closing up nearly 7%. This indicates capital is conducting fine-grained selection within the broader tech sector.
Market Adjustment Not a Major Theme Shift, But a Rally Requires Time
Regarding the more critical question of market direction, China Europe Fund stated this adjustment does not represent a complete shift in the medium-term主线. The synchronous decline of the three major indices reflects a phase of rapid情绪出清. While recent market rebalancing is gradually unfolding, the medium-term upward trend has not been invalidated, though short-term patience is needed for interim reports to verify industry景气. Rebuilding market consensus will take time, awaiting new配置 opportunities after quality主线 assets adjust.
Wei Fengchun, Chief Economist at China Merchants Fund, analyzed current investor anxiety from structural and temporal dimensions: first, whether the growth trend has changed; second, the technical and temporal structure of growth—namely, whether non-AI vs. AI and soft tech vs. hard tech are beginning to swap positions. The AI主赛道 will not change, but timing importance is highlighted.
Wei believes this rally's core is AI industry红利 driving定向抬升 in risk appetite, with capital shifting top-down from traditional cyclical assets to the new productive forces主线. The强弱分化本质上 represents the交替切换 of valuation定价权 between old and new industries. The current market is in the first stage of a狂热期, characterized by policy support and capital倾斜 towards R&D.
Jin Xin Fund offered a more positive view, suggesting a moderate pullback could lead to a steadier advance. The rapid earlier rise in tech stocks lifted valuations and expectations for some标的; increased short-term volatility is not surprising. Post-adjustment, the market will refocus on comparisons of earnings delivery, order growth, capital expenditure realization, and valuation attractiveness. For quality companies with genuine industry trends, profitability, and import substitution potential, pullbacks反而 provide a more从容 window for observation and positioning.
China Europe Fund expects that after market筹码 and sentiment complete their切换, tech stocks, following基本面 expectations, may continue to outperform consumer and domestic demand sectors. From a medium-to-long-term perspective, domestic assets possess scale and policy advantages, with tech being the core driver of A-share profit improvement.
A fund house noted that, overall, this decline represents a pressure release and an expectation recalibration. The tech sector may remain volatile short-term as capital rebalances between high and low positions, with increased个股分化. However, medium-term, the AI industry trend is not over, the domestic semiconductor chain is still expanding, and the listing of a domestic memory leader有望 establish a new valuation锚点 for A-share hard tech assets. The market shifting from "broad rally" to "selective picking" is not necessarily negative.
Amid "Rebalancing," Dividend Assets May Regain Favor
As the tech sector剧烈震荡, dividend assets have again become a safe haven. Sectors like banking and coal have shown relative resilience, with some investors感慨 about their stability.
Taking a红利低波 index as an example, its trailing twelve-month dividend yield has reached 5.2%, with its recent weekly turnover accounting for only 1.23% of the total A-share market—below its one-year average—indicating突出 dividend回报优势, healthier trading structure, and significantly lower拥挤度 than the tech sector.
Huatai-PineBridge Fund observed that since Q2, with easing geopolitical risks, falling oil prices, and rising market risk appetite, capital has阶段性地 flowed more towards tech growth, creating明显的 market structure分化. However,全市场红利类 ETFs have continued attracting incremental inflows, with net inflows of 9.8 billion and 9.2 billion yuan in May and June respectively,充分体现不少中长期资金's持续认可 and active positioning in such assets.
Huatai-PineBridge Fund pointed out that红利低波主题 ETFs may currently be in a stage where dividend吸引力 is提升,配置力量 is增强, and修复基础 is逐步夯实. Short-term, they may benefit from valuation repair driven by market style rebalancing. Medium-term, against a backdrop of延续 low利率环境 and持续存在 demand for long-term稳健收益, they may remain优质工具兼具股息收益,波动控制, and底仓配置属性.
Wan Jia Fund added from a macro strategy perspective that against global geopolitical博弈 and反复波动的 macro liquidity expectations, major A-share broad-based indices are expected to continue呈现明显强于海外市场的偏强震荡格局. For配置, it suggests关注周期行业 like coal, agriculture/forestry/livestock/fishing, and non-ferrous metals. Coal, in particular, benefits from双重支撑 of high股息 and供需紧平衡, possessing较好的攻防兼备属性 at the current juncture.
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