Amid a collective rebound in overseas markets, A-share performance remained relatively weak. On October 21, the three major stock indices collectively surged then retreated. Among them, the Shenzhen Component Index and the ChiNext Index were the first to hit new lows for the year. Some analysts noted that during the bottoming process, market sentiment is relatively subdued, and on-market capital is more sensitive to negative news. However, as positive signals continue to be released, this helps accelerate the market's bottoming process.
All Three Major Indices Turned Negative
The Shanghai Composite Index opened slightly higher that day and continued to fluctuate within a narrow range. As selling pressure intensified during the session, the index began to oscillate downward, plunging in late trading but finding support above the 3,700-point integer level. The closing decline narrowed slightly, and the 5-day moving average was lost after being regained.
The Shenzhen Component Index and ChiNext Index followed a similar pattern. After a brief rebound in early trading, they quickly plunged after standing above the 5-day moving average. The decline accelerated in the afternoon, and both ultimately hit new lows for the year. As of the close, the Shanghai Composite Index closed at 3,713.03 points, down 0.6%; the Shenzhen Component Index closed at 11,704.35 points, down 0.82%; the ChiNext Index closed at 2,694.71 points, down 1.62%. In terms of trading volume, the combined turnover of the Shanghai, Shenzhen, and Beijing markets totaled 1.44 trillion yuan, a slight decrease of nearly 30 billion yuan from the previous trading day.
On the board, sectors such as agriculture, forestry, animal husbandry and fishery, communication engineering, cloud services, and electronic components rebounded against the trend. Battery, telecom services, coal, and automobile sectors were among the top decliners. In terms of individual stocks, nearly 2,000 stocks in the entire market rose against the trend, with 50 hitting the daily limit, both lower than the previous day, while more than 3,300 stocks declined.
It can be seen that the biggest highlight of the market was undoubtedly the simultaneous volume-driven plunge of CATL (ASX: 300750) A-shares and H-shares. In the A-share market, CATL opened low and fell on October 21, with a full-day decline exceeding 12%. Its stock price has fallen more than 50% from its historical high on May 7, 2026, with market capitalization shrinking by more than 1 trillion yuan. The direct trigger for the sharp decline was the third-quarter earnings report disclosed on the evening of October 20, which showed CATL with a clear characteristic of increased revenue but no profit growth. Institutions such as Citi and JPMorgan subsequently lowered their earnings forecasts and target prices, further intensifying market concerns. As a heavyweight stock in the ChiNext, CATL's single-day plunge directly dragged down the index and significantly impacted market sentiment.
Positive Signals Continue to Accumulate
From the perspective of index movement characteristics, after the previous rapid correction, A-shares began to oscillate and flatten, gradually entering a bottoming phase. Although market sentiment is relatively subdued, causing the index to continue fluctuating, some positive signals have already emerged in the market, and investors need to wait patiently for the market to stabilize.
Datong Securities pointed out that, on the one hand, although US inflation data exceeded expectations, its overall breadth declined and rate hike expectations weakened, reducing the market's expectations for subsequent liquidity risk. On the other hand, domestic economic data has been released one after another, with GDP growth reaching 4.6% and inflation data performing relatively well. At the same time, policies are also continuing to exert force. The China Securities Regulatory Commission, in a symposium held on October 10, proposed to continuously strengthen the construction of market stabilization mechanisms and explicitly stated the need to study and reserve more incremental policy tools. Combined with the upcoming disclosure of third-quarter earnings reports, most technology companies have positive earnings expectations, and ETF funds have recently seen significant net subscriptions.
In summary, many positive factors are continuously brewing. However, it should still be noted that the current market is heavily influenced by emotional factors. Although long-term funds have taken bottom-supporting actions, the index still fluctuates significantly in the short term. It is difficult to say whether the market will reverse in the short term, and we need to wait for the bottom to form.
Yang Changlong, a senior investment advisor at Jufeng Investment Advisory, said in an interview with a reporter: "The Shanghai Composite Index is still testing support near the 3,700-point level. Overall, the current market remains in a weak consolidation phase, with incremental funds showing weak willingness to enter. Pressure at the index level mainly comes from earnings expectation adjustments of heavyweight stocks. For investors, in the context of intensifying index divergence, blindly chasing heavyweight stocks or panic selling are not wise strategies. A more rational approach is to focus on structural directions supported by industrial logic and continuous capital inflows, and seek allocation opportunities with higher certainty amid weakness."
Comments