On September 9th, A-shares displayed a pattern of shrinking trading volume alongside divergent index performance, with total turnover falling below the 1.9 trillion yuan mark. While indices posted mild gains, more than 3,600 individual stocks closed lower, with AI-related data, pharmaceuticals, and consumer sectors experiencing weakness, contrasted by strength in coal and non-ferrous metals. The technology sector showed a subdued performance overall. Market analysts suggest the ongoing market bottoming process is likely to persist until mid-to-late September, with the inflection point hinging on the resolution of external events, particularly the Federal Reserve's mid-September policy meeting. A clearer directional move could emerge towards the end of the month. In the current environment of shrinking volumes and divergent trends, investors are advised to adopt a balanced allocation strategy and avoid repeatedly chasing rallies between technology and traditional sectors. With the approaching holidays, market participation is turning cautious and risk appetite remains under pressure, enhancing the appeal of high-dividend, low-valuation sectors.
Market turnover contracted to 1.87 trillion yuan, a reduction of 105.2 billion yuan from the previous session, as the benchmark indices experienced mild gains, with the Shanghai Composite outperforming its Shenzhen counterpart. The Shanghai Composite Index rose 0.28% to close at 3,951.51 points, while the ChiNext Index dipped 0.14% to 3,354.97 points and the Shenzhen Component Index edged up 0.15%. The CSI 300 and SSE 50 posted slight gains, whereas the STAR 50 and BSE 50 indices saw minor declines. Recent volume has consistently hovered around the 2 trillion yuan mark, a notable drop from the over 3 trillion yuan levels seen multiple times earlier this year. Data on leveraged funds showed margin financing and securities lending balances across the three major exchanges stood at 2.65 trillion yuan as of September 8th. The day's trading had a distinctly negative breadth, with 3,642 stocks closing in the red, including 7 hitting the daily downside limit, while 1,794 stocks advanced, with 49 reaching the upside limit.
In terms of actively traded stocks, seven names, all in the technology sector, recorded daily turnover exceeding 10 billion yuan. Among these, Zhongji Innolight edged up 0.72% to 908.9 yuan per share, Dongshan Precision climbed over 5% to 196.06 yuan, Hengtong Optic-Electric closed up 5.56% at 66.62 yuan, and HGTech surged 8.22% to 108.79 yuan. Conversely, CXMT fell 2.6% to 56.87 yuan. Sector-wise, gains were seen in base metals, coal, precious metals, port shipping, offshore engineering, superconducting concepts, high-speed copper connections, holographic technology, and 3D glass. Meanwhile, AI corpora, entertainment and consumption, medical devices, marketing services, and real estate development were among the decliners. Across the 31 Shenwan primary industry indices, 16 closed higher, with coal up nearly 3%, and non-ferrous metals, defense, transportation, utilities, and steel also performing well, while telecom, banking, non-bank financials, oil & petrochemicals, and basic chemicals saw modest gains. The media sector fell nearly 3%, with real estate, beauty care, pharmaceuticals, food & beverage, and computer sectors all declining over 1%, and electronics slightly lower.
Market participants noted a clear shrinkage in volume coupled with structural differentiation. "The market is currently in a phase of divergent rotation and consolidation following the pullback in the technology rally. Today's decline in individual stocks against a rising index reflects a rebalancing of existing capital between sectors," observed Hu Moxuan, fund manager at Mingze Investment. He explained that on one hand, after the cooling of the broad AI tech trading fervor, chips still need time to be digested, with no new strong, sustainable theme emerging to absorb capital. On the other hand, external uncertainties such as the Fed's September meeting, geopolitical tensions, and the trajectory of Sino-US economic relations have yet to be resolved, dampening capital allocation appetite and fostering a cautious trading atmosphere. Liu Youhua, research director at Paipaiwang Wealth, noted that with incremental funds absent, existing capital is rapidly probing different sectors, but coal and shipping themes lack cohesive force, creating a "fragmented themes, difficult to form synergy" pattern. Concurrently, capital is taking profits from AI application directions with large prior gains and high valuations, rotating into cyclical defensive sectors with "pricing power logic and low positioning", indicating a style shift from theme-driven to fundamentals-driven investing.
"The shrinking volume itself is a key signal, indicating unresolved divergence between bulls and bears and a lack of willingness for incremental funds to enter; the market is currently substituting structural differentiation for trend selection," said Xing Yicai, research director at Zirui Xing Investment. He elaborated that the day's low-volume, index-divergent, broad-market-decline pattern is essentially a "high-low switch" and a phase of declining risk appetite under dominated by existing funds, understandable from three perspectives. First, external disturbances: rising Middle East geopolitical tensions pushing up international oil prices and high US Treasury yields are suppressing global risk appetite, pressuring growth-valuation sectors. Second, domestically, we are in a macro data window where the market awaits direction confirmation between inflation readings and policy space, with a strong wait-and-see sentiment, favoring certainty over proactive offense. Third, previous high-flying media and some high-level theme stocks faced regulatory scrutiny and profit-taking, prompting funds to rotate from tech growth towards resource cycles, defense, and transportation sectors with pricing power and greater certainty. Hong Lei, president of Jianyuan Investment, added that the recent sustained divergence is a result of capital's cost-performance rebalancing under stock market game. After months of rallying, tech sector valuations are at the historical 90th percentile with crowded positioning; traditional sectors have lagged for a long time but have clear short-term catalysts. Long Jiangwei, fund manager at Hang Seng Qianhai, analyzed that A-shares are in a phase of structural rebalancing, with the market bottom increasingly solidifying amid continuous policy signals, suggesting limited downside risk for indices. Externally, although Fed meeting uncertainties remain, the market has already begun to digest them, and the most intense impact of tightening expectations on growth sectors is passing, with external disturbances likely to diminish marginally.
Since August, A-shares have primarily been in a volatile consolidation. Looking ahead, Hong Lei opined that indices are unlikely to see trend-following moves, with a high probability of maintaining a "profit peak, policy bottom" range-bound oscillation. With insufficient willingness for incremental funds, the approaching Fed meeting, and cautious trading before the Mid-Autumn and National Day holidays, risk appetite remains suppressed. In this environment, he favors high-dividend, low-valuation sectors, focusing on quality areas like banking, utilities, coal, and transportation.
Hu Moxuan expects the current market bottoming to likely persist until mid-to-late September. The key turning point depends on the pace of external event resolution. After the Fed's mid-September meeting concludes, combined with whether Sino-US diplomatic schedules proceed as expected and related trade consultation signals emerge gradually by end-September, the market is anticipated to make a directional choice towards the month's end. Xing Yicai believes the sustainability of any market move hinges on the resonance between volume and catalysts. If turnover remains persistently low and a clear mainline fails to emerge, the oscillating rotation pattern is likely to continue; conversely, if volume picks up moderately with positive fundamental or policy catalysts, market styles could rebalance. Key factors to monitor include overseas inflation and Fed policy paths, domestic policy implementation pace and incremental space, sustainability of oil and coal prices, and whether turnover can effectively expand alongside risks from high-level theme stock volatility spillover. Wang Zheng, general manager of Shangyi Fund, stated that A-shares face both support and pressure, with resistance from previous profit-taking and external factors above, and solid support from policy expectations and low-level sectors below, likely maintaining a volatile divergent trend in the near term. The market has shifted from rapid adjustment to a repeated confirmation phase. While there's no significant exodus of overall funds, there's substantial disagreement between high-level tech and low-level traditional sectors, with no unified market mainline yet. The short-term market requires continued oscillation and rapid rotation to complete chip digestion, lacking conditions for a sustained one-way trend. He cautioned that externally, attention should be on geopolitical situations, international oil prices, US yields, and overseas monetary policy expectations, noting high oil prices intensify inflation uncertainty and rising rates pressure high-valuation assets; domestically, focus on policy implementation effects, economic data, market trading activity, and improvements in incremental funds. "The market is in a vacuum phase awaiting catalysts with unclear direction; until turnover consistently expands and major policies land, A-shares will continue their box-range oscillation and bottoming-building pattern," he added. Liu Youhua advised strategically buying in batches into directions with solid earnings support and valuation alignment, focusing on sub-sectors capable of sustained profit delivery, returning to fundamentals and certainty.
Regarding positioning amidst shrinking volume and rotation, Xing Yicai suggested investors return to fundamentals and certainty, balancing attack and defense: First, control overall position sizing; avoid excessive chasing or leverage until volume effectively expands, retaining cash flexibility. Second, optimize holdings towards sectors and stocks with strong earnings certainty, reasonable valuations, and stable cash flows, being cautious of pure theme specs lacking performance support. Third, emphasize balance and diversification to avoid excessive concentration; moderately rebalance between value and growth, cyclical and defensive. Fourth, adhere to an earnings-oriented approach, using "earnings delivery plus valuation match" as the screening mainline ahead of the Q3 reporting window, reducing reliance on short-term news and sentiment. Fifth, maintain patience and trading discipline; reduce frequent trading amidst noisy market signals, adopting a medium-to-long-term perspective, and wait for clearer volume and mainline signals before adding exposure.
On choosing between tech and traditional sectors displaying a seesaw effect, Wang Zheng analyzed that if turnover stabilizes, tech weights hold, and low-position directions remain active, the market still has room for repair; otherwise, indices may continue to fluctuate. Tech's pullback stems from large prior gains, crowded trading, and profit-taking pressures post-rally, alongside repeated overseas rate expectations directly impacting high-valuation growth stocks. Traditional sector strength is more about short-term capital inflows to low-position, low-valuation directions, not yet confirming a long-term style switch. Therefore, investors shouldn't repeatedly chase rallies between the two categories. In tech, retain core positions in sectors with clear industrial trends and deliverable earnings, controlling high-valuation, high-volatility instruments; in traditional sectors, emphasize reasonably valued, cash-flow-stable, or supply-demand improving sectors, maintaining balanced portfolios with gradual adjustments. Long Jiangwei stated that globally, markets are cooling risk appetite due to geopolitical conflicts, oil prices, and volatile Fed policy expectations. In the short term, the Shanghai index oscillates around 3,900 points, with tech growth valuations needing time to digest; market focus may shift from theme speculation to earnings delivery and valuation attractiveness. The mid-September Fed meeting, overseas liquidity expectation changes, geopolitics, and oil prices remain key disturbances. Long-term, with sustained domestic policy efforts and economic recovery expectations, indices have support below; upside exists but requires continuous turnover confirmation. Allocation-wise, short-term attention could focus on pro-cyclical and defensive sectors with high earnings certainty and reasonable valuations (like banking, non-bank financials, agriculture, retail), while accumulating quality growth mainline targets like AI computing power, semiconductors, and domestic substitution at lows. The A-share market overall will continue to exhibit structural rotation characteristics. Hu Muxuan stressed, "Until the market mainline is clear, it's advisable to control positions and patiently wait for various uncertainties to digest." Current positioning strategies should center on diversified allocation and buy-dips-sell-rips. The tech sector's logical mainline hasn't changed; focus on targets with solid fundamentals and domestic substitution logic, accumulating on dips. Also, watch directions like robotics, non-ferrous metals, non-bank financials, agriculture, and shipping. Hong Lei believes that with domestic risk-free rates in a downward channel, high-dividend instruments' bond-like attributes are prominent: bank dividend yields generally exceed 5%, coal companies have stable dividend commitments, utilities boast excellent cash flows benefiting from electricity market reform, and these sectors trade near five-year historical lows with PEs often below 10x and PBs generally under 1x, offering ample safety margins. Furthermore, strengthening SOE market cap management assessments and dividend orientation reinforces the long-term logic of the dividend strategy, making it a core allocation with both defensive and positive catalysts in an oscillating market.
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