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Under the influence of overseas factors, major global markets experienced sharp volatility, and A-shares could not remain unaffected, with all major indices undergoing rapid pullbacks and index centers moving lower. On October 16, the Shanghai Composite Index showed relatively strong performance in the morning session and once returned above the 3741-point resistance level, but in the afternoon, as selling pressure clearly intensified, the index fluctuated downward throughout the session, with a rapid late-session rally barely turning it positive.
The Shenzhen Component Index, ChiNext Index, and STAR 50 Index followed a similar pattern, showing intraday highs followed by pullbacks throughout the day and late-session rallies, but none managed to turn positive. Shanghai Composite Index daily K-line chart.
As of the close, the Shanghai Composite Index closed at 3716.28 points, up 0.24%; the Shenzhen Component Index closed at 11802.46 points, down 0.12%; the ChiNext Index closed at 2772.38 points, down 0.39%; and the STAR 50 Index closed at 1358.65 points, down 0.06%.
In terms of trading volume, total turnover across the Shanghai, Shenzhen, and Beijing markets combined was less than 1.6 trillion yuan, shrinking by nearly 100 billion yuan compared with the previous trading day. On the board, sectors such as defense and military industry, real estate, automobiles, and agriculture, forestry, animal husbandry, and fisheries led the gains. Sectors such as media, pharmaceuticals, non-bank financials, and electronics experienced varying degrees of pullback.
In terms of individual stocks, more than 3,300 stocks across the A-share market rose, the number of limit-up stocks increased to 63, while more than 2,100 stocks declined. Regarding the A-share market's intraday highs and pullbacks, some analysts pointed out that domestic liquidity conditions still face pressure, the willingness of incremental funds to enter the market is insufficient, and short-term funds are mostly rotating among localized themes, lacking a mainline that can drive the overall market.
At the same time, as the weekend approached, market sentiment became more wait-and-see regarding policy, external events, and global technology stock earnings, which also weakened afternoon bullish momentum. On the technical level, the previous day's gap had not yet been effectively filled, upward resistance was obvious, and after a rebound encountered resistance, it easily triggered simultaneous release of profit-taking and trapped positions.
From the perspective of index movement, after a short-term rapid pullback, the broader market began to show signs of stabilization. Will a rebound appear next week? In response, Yang Changlong, a senior investment adviser at Jufeng Investment Advisory, said in an interview with Financial Investment News: "Several points are worth tracking going forward. First, whether trading volume can expand again. Only if turnover continues to return to a higher level can a rebound have a basis for continuation. Second, the relationship between gap filling and resistance near the index gap. If the gap is filled and the index can hold steady, it indicates stronger market absorption. If it charges higher and then loses the level again, then we still need to guard against a second bottom. Third, whether the sector structure can shift from thematic rotation to mainline resonance, with particular attention to the securities and technology directions. The securities sector often plays the role of supporting the market and stabilizing sentiment, while the technology direction better represents offensive elasticity. Overall, only if all three improve at the same time is the market more likely to shift from repeated volatility to a true rebound."
Short-term sharp volatility does not change the medium-term logic. CICC analysis pointed out that the recent combination of external disturbances and liquidity pressure has led to more "headwind" factors. Looking ahead, positive signals are still needed, and there is no need to be pessimistic at the current position. In the short term, geopolitical tensions in the Middle East continue, high energy prices increase inflation stickiness, and U.S. Treasury yields are unlikely to decline quickly. The AI industry chain is in a period of verifying earnings and investment returns, and the market is quite sensitive to negative information. Weak trading activity and insufficient incremental funds also constrain market repair.
At the current point, continue to monitor possible marginal changes, such as the geopolitical situation, the possibility of improvement in the domestic funding environment, and the release of third-quarter earnings. In the medium term, valuation adjustments and earnings repair are still expected to provide support for the market. After the adjustment, the medium-term cost-effectiveness of overall A-share valuations has further improved, and the structural overvaluation problems faced by some sectors in the first half of the year have also improved to a large extent. The full year is expected to usher in the best earnings period of the past five years. The restructuring of the global monetary order and the technology narrative still provide support for A-shares. Overall, domestic fundamentals and medium-term logic have not changed, and there is no need to be pessimistic about the market's medium-term trend.
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