September 4 saw A-shares open higher but trend downward, with a sudden afternoon selloff. The ChiNext Index trimmed gains to close 0.78% lower after climbing nearly 2% in morning trade, while the STAR 50 Index dropped over 2%. Turnover expanded on both exchanges, returning above the 2 trillion yuan mark, with more than 2,900 stocks closing in the red.
Market action showed sharp divergence, with strength集中在 value plays and AI applications. The agricultural, fishery, and husbandry sector renewed its assault, as food grain and pork concept stocks triggered a wave of limit-ups. The tracking index for Agricultural and Fishery ETF Huabao (159275) surged 4.24%, while the benchmark for Food and Beverage ETF Huabao (515710) added nearly 2%. The Bank ETF Huabao (512800) tracking index rose close to 1% again.
AI momentum rotated toward applications and software. The underlying index for Hong Kong Internet ETF Huabao (513770) jumped over 4% intraday before closing 3.64% higher, while Fintech ETF Huabao (159851) saw its benchmark gain up to 5% intraday and settle 2.4% higher. The Software Development ETF Huabao (159036) tracking index advanced more than 1%.
Hard tech names represented by chips and optics continued their pullback, as risk-off sentiment built ahead of the US jobs report. The August nonfarm payrolls data, due out tonight, represents the most critical macroeconomic release before the Federal Reserve's rate decision and will directly shape the future policy path. Markets have entered a key observation window ahead of the September FOMC meeting, with near-term liquidity tightening expectations potentially pressuring valuations. Institutions are recommending a focus on sectors with greater earnings visibility.
Where to begin
Looking ahead, the market still has room to extend its rebound into September. From a longer-cycle perspective, A-shares remain in the third stage of an earnings-driven uptrend, a view validated by second-quarter reports showing sustained profit improvement. Sectors with strong earnings growth will complete the transition from narrative to financials and from valuation to profitability, keeping the market on an upward trajectory.
Agricultural sector storms higher
The agricultural, fishery, and husbandry segment continued its aggressive advance, with planting chain and livestock breeding stocks leading gains. By the close, Yasheng Group, Dunhuang Seed, Xin Wufeng, Bangji Technology, Tech-bank Food, New Hope, and Zhongshui Fishery hit limit-up, while Jinxinnong, Tangrenshen, and Juxing Nongmu also gained strongly. The CSI All-Share Agriculture & Fishery Index, tracked by Agricultural and Fishery ETF Huabao (159275), closed 4.24% higher.
On the news front, hog prices continue to climb. Data shows the national average hog price hit 11.06 yuan per kilogram as of September 4, up nearly 17% from the June low of 9.47 yuan. September 4 saw报价 increases across northern and eastern China, helping stabilize the national market. With limited increases in monthly slaughter volumes from large-scale farms and rising reluctance among farmers to sell after consecutive declines, supply dynamics are tightening.
Analysts note that while August brought a low-level rebound in hog prices, the industry remains in a loss-making state, and the inflection point of the hog cycle is still brewing. Though views on timing differ, continued capacity reduction is widely acknowledged. As losses accumulate, smaller household producers are exiting faster, which should support upside elasticity in the next cyclical upswing expected around 2027.
From a valuation standpoint, the sector remains at relatively depressed levels. As of the September 3 close, the tracking index's price-to-book ratio stood at 2.37 times, sitting at just the 15.75th percentile of the past five years, highlighting compelling long-term allocation value.
"Policy support for capacity adjustment has intensified since the second half of 2025, with recent moves suggesting further tightening ahead," noted Sinolink Securities. Soft hog prices combined with policy drivers should accelerate capacity reduction, paving the way for a new cyclical upturn. Over the medium-to-long term, the hog breeding industry maintains solid mid-cycle profitability. Following the post-African-swine-fever expansion, many players added low-quality capacity, leaving significant cost variance across the industry. Leading companies have ample room for excess profit generation, making low-cost, high-quality operators the preferred picks.
Agricultural and Fishery ETF Huabao (159275) passively tracks the CSI All-Share Agriculture & Fishery Index, with heavyweights including leading hog breeding names and coverage across feed, grain planting, and animal health segments. Off-market investors can access the sector via feeder funds (A-share: 013471, C-share: 013472).
Soft tech takes off
Hong Kong stocks opened firmer with internet leaders rallying collectively. Meituan-W climbed over 5%, Xiaomi Group-W added more than 3%, while Alibaba-W and Tencent Holdings both rose over 2%. The tracking index for Hong Kong Internet ETF Huabao (513770) gained as much as 4% intraday before closing 3.64% higher.
Three factors appear to be driving the strength in Hong Kong internet names. First, Fed Governor Christopher Waller offered a dovish tilt, cooling expectations for aggressive rate hikes in September. Second, overnight gains across all three major US indices provided a tailwind. Third, Snowflake's stunning 55% surge to record highs validated the commercialization potential of AI applications, offering a strong read-across to the Hong Kong internet complex.
With earnings from Alibaba, Tencent, and Meituan all now released, core businesses are showing resilience while AI strategies advance across the board. Large model iterations and accelerating Agent commercialization leave room for both earnings growth and valuation repair.
"The commercialization space for AI applications is opening up," noted Kaiyuan Securities. Major players like Tencent are validating AI office product business models, while consumer-facing Agents show breakthrough potential. This could sustain strong growth in domestic model Token/ARR metrics while accelerating Agent penetration in digital entertainment content production, enterprise office software, and physical AI applications.
Galaxy Securities observes that global AI pricing logic is shifting from hardware infrastructure toward application monetization. With domestic large model commercialization expectations heating up, attention should focus on AI application leaders, internet platforms with traffic advantages, and tech companies capable of converting AI investment into earnings.
Value realization in the AI industrial chain follows a clear sequence. Initially, "shovel-selling" segments like optical modules, CPO, storage, and AI chips command premium valuations due to supply scarcity and certain demand. Once technology matures and computing power becomes widespread, the companies capable of consumer-facing deployment, stable cash flow generation, and genuine traffic aggregation become the core long-term holdings.
As AI development and commercialization accelerate, the Hong Kong internet sector stands poised for strategic investment opportunities driven by both profit recovery and valuation repair. Hong Kong Internet ETF Huabao (513770) passively tracks the CSI Hong Kong Stock Connect Internet Index, concentrated in cloud giants like Alibaba-W and Tencent Holdings alongside various AI application companies. The top ten holdings account for over 80% of the portfolio, offering intraday T+0 trading and strong liquidity. Off-market investors may consider feeder funds (A-share: 017125, C-share: 017126).
Fintech shines amid three-dimensional rally
The fintech sector strengthened against the broader market's weakness. Fintech ETF Huabao (159851) saw notable trading activity, with its tracking index closing 2.4% higher. Standout performers included Chutian Dragon with its seventh limit-up in eleven days, Cuiwei Shares hitting limit-up, Four Dimension Jc and Infrasoft both surging over 12%, and Hengbao, Lakala, Colan Software, Linkage Software, and Yusys all gaining more than 5%.
Based on recent market dynamics and capital flows, the fintech sector is experiencing a convergence of multiple positive catalysts, warranting fresh structural reassessment of its allocation value. Specifically, a three-dimensional configuration is forming—"theme momentum, AI empowerment, and oversold recovery."
First, the digital economy mainline continues to develop with smooth internal momentum transfer. Market leader Chutian Dragon delivered seven limit-ups in eleven sessions, with Hengbao and Cuiwei Shares following in orderly succession. The absence of obvious sector divergence suggests healthy rotation between sub-segments, with profit-taking effects spreading to second-tier names—indicating solid thematic persistence and deep capital participation.
Second, expectations for "AI + finance" commercialization are building as the next catalyst. The successful launch of China's first AI-produced drama marks AI applications moving from technical validation into large-scale commercial deployment. Fintech, as one of the most direct AI-enabled scenarios with the strongest data foundations, holds vast room for penetration gains in intelligent investment research, risk modeling, and automated operations, potentially delivering outsized returns in the AI application wave.
Third, momentum for valuation repair after sharp declines is accumulating. The fintech index has fallen nearly 24% year-to-date as of September 3, with both time and space for correction now sufficient. With markets rotating, attention is returning to low-valuation, high-beta segments, and the potential energy for oversold rebounds may be entering an accumulation phase. Once sentiment shifts, upward elasticity deserves close attention.
Chen Jianhua, fund manager of Fintech ETF Huabao (159851), recently noted that the index has reclaimed its 60-day moving average for the first time this year, with strengthening intra-sector linkage. Orderly succession among digital economy leaders and capital movement hints at potential catalysts ahead. Having been oversold for the year, the sector shows strong catch-up demand relative to other tech indices. With the technical breakout combined with a valuation trough, fintech offers both safety margin and offensive elasticity, suggesting investors consider accumulating on dips and capturing swing opportunities.
The tool for participation, Fintech ETF Huabao (159851) and its feeder funds (A-share: 013477, C-share: 013478), tracks an index heavily weighted toward computers and non-bank financials, covering internet brokerages, fintech IT, cross-border payments, and AI applications—combining financial cycle and tech growth characteristics.
Source: Shanghai and Shenzhen exchanges, as of September 4, 2026. Fund fee details are available in respective fund legal documents.
Institutional perspectives: China Merchants Securities (August 30) "Rebound Not Over, Attack First Then Defend"; Sinolink Securities (September 2) "Agriculture 1H26 Summary: Breeding Sector Inflection Point Emerged, Cyclical Reversal Opportunity"; Kaiyuan Securities (September 1) "US AI Application Companies Continue Impressive Results, Domestic Models Advance"; Galaxy Securities (August 28) "Overseas Giants Beat Expectations Massively! Domestic Large Model Iteration Accelerates, AI Application Commercialization Space Opens."
Risk disclosure: Agricultural and Fishery ETF Huabao passively tracks the CSI All-Share Agriculture & Fishery Index (base date: December 31, 2004; published: December 12, 2016). Hong Kong Internet ETF Huabao passively tracks the CSI Hong Kong Stock Connect Internet Index (base date: December 30, 2016; published: January 11, 2021). Fintech ETF Huabao passively tracks the CSI Fintech Theme Index (base date: June 30, 2014; published: June 22, 2017). Index constituent composition adjusts per index rules, and historical backtested performance does not predict future index behavior. Stocks mentioned are objective examples of index constituents only, not stock recommendations, and do not represent fund manager views or fund investment directions. Information herein serves as reference only; investors bear responsibility for their own investment decisions. Any views, analysis, or forecasts in this article do not constitute investment advice. Investors should carefully read fund contracts, prospectuses, and product summaries to understand risk-return characteristics and select products matching their risk tolerance. Past performance does not predict future results. Agricultural and Fishery ETF Huabao (159275) and Fintech ETF Huabao (159851) are rated R3-medium risk, suitable for balanced (C3) and above investors. Hong Kong Internet ETF Huabao (513770) is rated R4-medium-high risk, suitable for aggressive (C4) and above investors. Suitability opinions may vary by sales institution. Fund investment requires caution.
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