Core View: This Week's A-Share Market Performance
(1) This week (October 19鈥揙ctober 23), the A-share market experienced a volatile correction. The All-A Index fell 0.58%. The ChiNext Index dropped 3.18%, while the Beijing 50 Index and CSI 1000 Index defied the trend and closed higher.
(2) In terms of style, small-cap stocks were relatively favored this week, with the CSI 1000 (+0.79%) outperforming the CSI 300 (-1.57%); among the five major style indices, stable and financial styles saw the largest pullbacks, while consumer and growth styles experienced relatively narrower declines.
(3) At the sector level, most first-tier industries corrected this week. Computer, machinery equipment, and automotive sectors led gains, while conglomerates, coal, and real estate sectors lagged.
This Week's Capital Flows
(1) Trading activity in the A-share market slightly declined. The average daily turnover this week was 1,575.4 billion yuan, down 751 million yuan from last week; the average daily turnover rate was 1.3292%, down 0.06 percentage points from last week.
(2) As of Thursday, the balance of margin financing and securities lending decreased by 33.167 billion yuan, of which the margin financing balance fell by 32.794 billion yuan.
(3) During the period from October 15 to October 21, global funds recorded a net inflow of 8.082 billion US dollars into A-shares (previous value: 4.098 billion US dollars), showing an accelerating net inflow trend. Among them, overseas funds had a net flow of -175 million US dollars (previous value: -70 million US dollars).
This Week's Valuation Changes
The All-A Index PE (TTM) valuation decreased by 1.24% from last week to 19.73 times, at the 65.15th percentile since 2010; the PB (LF) valuation fell 0.63% to 1.70 times, at the 35.94th percentile since 2010. The All-A stock-bond spread was 3.4276%, near the 3-year rolling average (3.2584%) plus 0.29 standard deviations, at the 74.05th percentile since 2010.
A-Share Market Investment Outlook
This week, the market continued to be affected by weak sentiment, with margin financing balances continuing to decline. However, broad-based ETFs saw contrarian net inflows and repeatedly surged in volume during the final trading sessions, showing significant support and absorption characteristics. In the short term, the space for panic-driven sharp declines in the index is limited, and attention should be paid to rebound opportunities after the previous oversold conditions. Given the recent multiple external variable disturbances, the characteristics of repeated index fluctuations, sector structural rotation, and using time to exchange for space are expected to persist. External constraints present a complex landscape of surging international oil prices, marginal declines in US Treasury yields alongside rising European sovereign risks, and re-pricing of AI risk appetite. With the US midterm elections approaching, political uncertainty may temporarily elevate risk premiums in global equity markets. Domestically, next week A-shares enter a dense third-quarter earnings disclosure window, with focus on performance verification and recovery opportunities in K-shaped upper-tier sectors. Among these, technology growth is shifting from "narrative" to "realization," and companies with earnings support are expected to stage structural recovery rallies. On the policy front, at the 2026 Financial Street Forum Annual Meeting, regulators emphasized "fully safeguarding the safety and stability of the capital market," releasing a clear signal of nurturing stable market operations; on the fiscal side, special bond fund deployment and the advancement of "Six Networks" construction, along with the top-level deployment of the "AI+" initiative, provide policy support for medium-term transmission of earnings and orders.
Key Focus Next Week:
(1) The 20th Central Committee's Fifth Plenary Session will be held from the 26th to the 29th, and A-share listed companies will intensively disclose third-quarter earnings next week, with attention on performance verification and catalysts;
(2) Next week will see a global central bank week, with the Federal Reserve announcing its decision in the early hours of the 29th Beijing time. Attention should be paid to the September PCE and third-quarter GDP data released on the same day, as well as the European Central Bank and Bank of Japan interest rate decisions to be announced on the 29th and 30th respectively;
(3) At the industry level, SK Hynix, Microsoft, Alphabet, and others will disclose earnings next week, and the CPE2026 International Computing Power Exhibition, Satellite Application Conference, and Apple New Product Launch Event will also be held.
Allocation Opportunities: Focus on Three Directions of the "Barbell" Strategy
One end is the oversold recovery opportunities in technology growth sectors, focusing on semiconductors, optical communications, servers, and other directions. Meanwhile, the self-controllable logic of advanced semiconductor processes and high-end equipment still exists, and from a liquidity perspective, innovative drugs remain worthy of attention; the other end is the dividend foundation, allocating to financials, utilities, coal, and other sectors; additionally, policies continue to promote accelerated implementation of major projects and the formation of physical workloads, with attention on power grids, energy storage/power配套设施, building materials, engineering machinery, and other segments.
Risk Warnings
External uncertainty risks; risks of policies falling short of expectations; risks of unstable market sentiment and continued liquidity adjustments.
Main Text
I. This Week's Market Review
(1) Index Performance
This week (October 19鈥揙ctober 23, 2026, same below), the A-share market experienced volatile corrections, with most major broad-based indices pulling back. The All-A Index fell 0.58%. The ChiNext Index led the decline with a 3.18% drop, while the Beijing 50 Index and CSI 1000 Index defied the trend and closed higher. On Monday and Tuesday, the market saw minor recoveries, but as continuously rising international oil prices drove risk aversion and concerns about the global AI industry chain persisted, the index level came under overall pressure on Wednesday and Thursday. By Friday's close, sentiment entered a phase of volatile recovery after bottoming out, with net inflows into equity ETFs forming support at the bottom. In terms of style, small-cap stocks were relatively favored this week, with the CSI 1000 (+0.79%) outperforming the CSI 300 (-1.57%); among the five major style indices, stable and financial styles saw the largest pullbacks, while consumer and growth styles experienced relatively narrower declines. At the sector level, most first-tier industries corrected this week. Physical AI and robotics were active, with the top three industry chains by gains being computer, machinery equipment, and automotive, rising 5.21%, 3.01%, and 1.51% respectively. Conglomerates, coal, and real estate sectors lagged. At the second-tier industry level, the top five industries by return this week were electrical machinery II, consumer electronics, automation equipment, IT services II, and software development; the bottom industries were batteries, real estate services, education, fisheries, and shipping ports.
(2) Capital Flows
Trading activity in the A-share market slightly declined. The average daily turnover this week was 1,575.4 billion yuan, down 751 million yuan from last week's average daily turnover; the average daily turnover rate was 1.3292%, down 0.06 percentage points from last week's average daily turnover rate. Foreign trading activity rebounded, with the average daily turnover of northbound funds this week at 244.344 billion yuan, up 4.258 billion yuan from last week's average daily turnover. As of October 22 (Thursday), the balance of margin financing and securities lending was 2,455.689 billion yuan, down 33.167 billion yuan from last week. Among them, the margin financing balance was 2,426.901 billion yuan, down 32.794 billion yuan; the securities lending balance was 28.788 billion yuan, down 374 million yuan. According to fund establishment date statistics, 24 new funds were established this week, with issuance shares of 4.746 billion. Among them, there were 18 equity funds (including stock funds and mixed funds), with issuance shares of 2.787 billion, up 2.076 billion from last week. This week's share proportion was 58.72%, up 39.68 percentage points from last week. According to listing date statistics, there were 3 IPOs this week, raising 1.663 billion yuan, and 8 refinancing deals, raising 10.575 billion yuan. The market capital outflow pressure next week will increase compared to this week. This week, a total of 61 companies had restricted shares gradually unlocked, totaling 2.475 billion shares, with a total unlocked market value of 98.620 billion yuan; next week (October 26鈥揘ovember 1), an estimated 44 companies will have restricted shares gradually unlocked, totaling 4.142 billion shares, with a total unlocked market value of approximately 106.010 billion yuan based on the October 23 closing price. According to EPFR statistics on global fund flows, during the period from October 15 to October 21, global funds had a net flow of 8.082 billion US dollars into A-shares (previous value: 4.098 billion US dollars), showing an accelerating net inflow trend. Among them, overseas funds had a net flow of -175 million US dollars (previous value: -70 million US dollars), including overseas active funds with a net flow of -116 million US dollars (previous value: -160 million US dollars) and overseas passive funds with a net flow of -81 million US dollars (previous value: 113 million US dollars). Structurally, using the scope of related listed stocks of mainland Chinese enterprises globally, we observe capital preferences for industry allocation in Chinese assets. During the period from October 15 to October 21, global funds' net inflow into the technology sector significantly led other industries, with a net flow of 2.795 billion US dollars (previous value: 4.624 billion US dollars), followed by infrastructure and consumer goods sectors, with net flows of 70 million US dollars and 64 million US dollars, and the consumer goods sector shifted from net outflow to net inflow; the telecom sector continued to see net outflows, with a net flow of -310 million US dollars (previous value: -111 million US dollars), followed by biotechnology and industrial goods sectors, which also saw relatively large net outflows. During the week, overseas funds turned to net outflow in the technology sector, with the largest net outflow scale, at -126 million US dollars (previous value: 251 million US dollars), followed by healthcare/biotechnology and consumer goods sectors; net inflow into the commodities/materials sector slightly expanded, with a net flow of 9 million US dollars (previous value: 9 million US dollars), and energy and real estate sectors also saw relatively large net inflows.
(3) Valuation Changes
As of October 23, the All-A Index PE (TTM) valuation decreased by 1.24% from last week to 19.73 times, at the 65.15th percentile since 2010, at a historical median level; the All-A Index PB (LF) valuation fell 0.63% this week to 1.70 times, at the 35.94th percentile since 2010, at a historical lower-middle level. The All-A stock-bond spread was 3.4276%, near the 3-year rolling average (3.2584%) plus 0.29 standard deviations, at the 74.05th percentile since 2010. At the industry level, among the 31 first-tier industries this week, 6 industries saw PE valuation increases. As of October 23, from a PE valuation perspective, a total of 12 industries had valuations above the 50th percentile since 2010, 14 industries had valuations in the 20%-50th percentile range since 2010, and another 5 industries had valuations below the 20th percentile since 2010. Among them, agriculture, forestry, animal husbandry and fisheries, conglomerates, and building materials had relatively high PE valuation percentiles, at 90.68%, 83.09%, and 82.34% since 2010 respectively; non-bank financials, non-ferrous metals, and beauty care had relatively low PE valuation percentiles, at 0.07%, 5.38%, and 8.9% since 2010 respectively.
II. A-Share Market Investment Outlook
This week, the market continued to be affected by weak sentiment, with margin financing balances continuing to decline. However, broad-based ETFs saw contrarian net inflows and repeatedly surged in volume during the final trading sessions, showing significant support and absorption characteristics. Equity ETFs have continued net inflows since September 22, with net inflows exceeding 270 billion yuan, and ETF trading volume expansion providing support. In the short term, the space for panic-driven sharp declines in the index is limited, and attention should be paid to rebound opportunities after the previous oversold conditions. Given the recent multiple external variable disturbances, the characteristics of repeated index fluctuations, sector structural rotation, and using time to exchange for space are expected to persist. External constraints present a complex landscape of surging international oil prices, marginal declines in US Treasury yields alongside rising European sovereign risks, and re-pricing of AI risk appetite. First, under Middle East geopolitical and shipping capacity disturbances, oil prices surged. The US and Israel may re-strike Iran after the US midterm elections, Houthi attacks on Saudi energy facilities, and frequent attacks on tankers in the Strait of Hormuz 鈥?these multiple factors combined have heightened market concerns about crude oil supply disruptions, with ICE Brent crude standing above 115 US dollars per barrel. Second, risk aversion factors outweighed inflation and supply factors, pushing US Treasury yields down, but this is a passive decline driven by risk aversion. The high-level volatile pattern of US Treasury yields has not faded in its disturbance to equity assets. Meanwhile, French government bond yields rose under political and fiscal uncertainty, with the France-Germany spread rising to its highest since the European debt crisis. Third, the market is re-examining AI capital expenditure returns, a path that spills over to A-share related industry chains through retracements in overseas semiconductors and hardware chains. Additionally, with the US midterm elections approaching, political uncertainty may temporarily elevate risk premiums in global equity markets. Domestically, next week A-shares enter a dense third-quarter earnings disclosure window, with focus on performance verification and recovery opportunities in K-shaped upper-tier sectors. Among these, technology growth is shifting from "narrative" to "realization," and capital focuses on three dimensions: whether earnings growth matches valuation, whether capital expenditure can convert into cash flow, and whether orders are stable and sustainable. Companies with earnings support are expected to stage structural recovery rallies. On the policy front, at the 2026 Financial Street Forum Annual Meeting, regulators emphasized "fully safeguarding the safety and stability of the capital market," "strengthening risk assessment and policy tool reserves, consolidating and improving the market stabilization mechanism," releasing a clear signal of nurturing stable market operations; on the fiscal side, special bond fund deployment and the advancement of "Six Networks" construction, along with the top-level deployment of the "AI+" initiative, provide policy support for medium-term transmission of earnings and orders. Looking ahead to next week, focus on the following events: (1) Domestic policy and earnings perspective: The 20th Central Committee's Fifth Plenary Session will be held from the 26th to the 29th, and A-share listed companies will intensively disclose third-quarter earnings next week, with attention on performance verification and catalysts; (2) Overseas perspective: Next week will see a global central bank week, with the Federal Reserve announcing its decision in the early hours of the 29th Beijing time. Attention should be paid to the impact of September PCE and third-quarter GDP released on the same day on subsequent monetary policy path expectations, as well as the European Central Bank and Bank of Japan interest rate decisions to be announced on the 29th and 30th respectively; (3) Industry catalyst level: SK Hynix, Microsoft, Alphabet, and others will disclose earnings next week, and the CPE2026 International Computing Power Exhibition, Satellite Application Conference, and Apple New Product Launch Event will be held next week. In terms of allocation, focus on three directions of the "barbell" strategy: One end of the "barbell" is the oversold recovery opportunities in technology growth sectors, focusing on semiconductors, optical communications, servers, and other directions. Meanwhile, the self-controllable logic of advanced semiconductor processes and high-end equipment still exists, and from a liquidity perspective, innovative drugs remain worthy of attention; the other end is the dividend foundation, allocating to financials, utilities, coal, and other sectors as a safety anchor for the portfolio; additionally, policies continue to promote accelerated implementation of major projects and the formation of physical workloads, with attention on power grids, energy storage/power supporting facilities, building materials, engineering machinery, and other segments.
III. Risk Warnings
External uncertainty risks; risks of policies falling short of expectations; risks of unstable market sentiment and continued liquidity adjustments.
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