The past trading week (June 1-5) saw the A-share market initially rise before falling. A total of 1,883 individual stocks posted cumulative gains, marking the best performance in nearly four weeks.
However, the market's most notable characteristic was the loosening of the "crowded trade" in technology stocks, which had been ongoing for two months.
A clear piece of evidence is that the ChiNext Index, which had shown the healthiest trend previously, also broke down and fell on Friday, dropping below its 20-day moving average for the first time since April 8.
Moreover, this time, global stock markets "coincidentally" face a similar challenge. Specifically:
During Thursday's US trading session, Broadcom Inc. shares plummeted over 12%, dragging down other semiconductor stocks and kicking off this round of adjustment.
The following day, US, Japanese, and South Korean stock markets experienced a "Black Friday."
South Korea's KOSPI index fell over 5%, with SK Hynix Inc. dropping nearly 10%. Japanese stocks were pressured downward due to interest rate hike expectations.
In the US session, the Nasdaq index plunged over 4% for the day, and the S&P 500 ended its nine-week winning streak. The Philadelphia Semiconductor Index closed down 10.26% on Friday, shedding over $1 trillion in market value in a single day, its largest single-day drop since March 2020.
A-share technology stocks also faced heavy selling on Friday, particularly in sectors with large capital capacity and significant recent gains. Wind data shows that 33 stocks had daily turnover exceeding 100 billion yuan that day, most of which were tech stocks that closed sharply lower.
Zhongji Innolight Co., Ltd., a leading player in CPO (co-packaged optics), saw heavy volume and a significant drop, with daily turnover reaching 583.25 billion yuan, ranking fourth in A-share history. It must be noted, however, that due to its high share price, this turnover figure is exceptionally large, though the trading volume itself is still within a normal range of increased activity.
This detail is highlighted primarily to encourage a more rational perspective on this tech stock decline, helping readers be less swayed by panic.
For instance, it is a relatively objective statement, supported by data, that the technology sector currently has high trading concentration—on Friday, the total turnover of the Wind TMT Index (containing 1,225 constituents from technology, media, and telecom sectors) reached 1.51 trillion yuan, accounting for about 48.7% of the total A-share turnover (3.1 trillion yuan).
Under such conditions, if investor risk appetite declines, incremental capital inflows decrease, and the willingness to take profits from high-position holdings increases, technology stocks are prone to corrections. It is also a reasonable inference that there may be further downside space ahead.
As noted in a Huajin Securities research report, reviewing history, after TMT sector concentration becomes high, the market may rotate to other industries or experience internal rotation from high to low valuations. Currently, technology may see a brief internal rotation, with AI hardware potentially remaining favorable after minor fluctuations.
However, based solely on current market performance, it is premature to directly declare the "end of the tech bull market" or that "the AI bubble will burst." Such judgments are overly vague and could stem from mere spectatorship or genuine panic.
The aforementioned Huajin Securities report suggests the A-share market may continue to consolidate and build a bottom in the short term, potentially resuming its upward trend after this period.
A Founder Securities research report posits that the market adjustment is nearing its end.
This round of broad market correction began in mid-May, with A-shares leading the decline ahead of major overseas indices. The core reason was sentiment realization following a high-profile political visit. Referring to the duration and magnitude of corrections following similar events, the overall A-share index has already completed most of its adjustment.
Furthermore, the siphon effect of the tech sector is gradually easing. Although the market's attempt to rotate from high to low valuations has not received positive feedback, some non-AI sectors, primarily HALO assets, are beginning to show relatively sustained profitable effects. Whether this effect can spread requires further observation. Overall, the outlook for Q3 remains relatively optimistic, and the current adjustment may present a good opportunity for positioning.
In terms of timing, US CPI data disclosure in early June, the SpaceX IPO, and the mid-June FOMC meeting will gradually clarify the situation. Any resulting disturbances could provide opportunities for buying on dips.
Of course, almost no one can maintain absolute rationality in investing. Conversely, sentiment is also a significant factor driving stock price fluctuations, which will not be elaborated on here.
We believe that only after a trend has truly ended can that series of candlestick patterns be defined as a "top." Regarding trends, mature traders should adhere to the principle of "not predicting, only responding."
Further, even if one similarly believes that "at Monday's (June 8) open, A-shares are highly likely to experience a panic-driven sell-off," the response of investors bullish on tech stocks versus those bearish on them could be completely different.
The former would consider "whether (tech stocks) meet the conditions for bottom-fishing" and act if they do.
The latter would consider "which other sectors might rise against the trend" and follow if any are identified.
At this point, if there is another, more pessimistic investor who believes the tech stock decline will drag the entire market down "indiscriminately," their response is more likely to be "exiting" and "waiting on the sidelines."
By now, you may have realized that the focus of pre-market planning is not "guessing" where the market will go, but setting the conditions that trigger your own trading actions—that is, how to "respond."
Once you have executed your predetermined trades, the market will naturally provide new feedback, reflected in floating profits or losses in your account. At that point, you need the next step of response—when to take profits or cut losses.
Regarding allocation strategies going forward, the aforementioned Founder Securities report suggests: closely monitor the improvement in market breadth of profitable opportunities, selectively structure within the AI main theme, and anticipate a turning point for HALO assets.
Specifically:
First, technology growth driven by AI, where the market is preemptively trading mid-year report expectations and potential Q3 catalysts. Focus can be placed on core overseas computing power targets and segments within the industrial chain's equipment and materials. Relatively low-positioned AI applications are in a left-side accumulation phase.
Second, HALO assets that have undergone relatively full adjustment, awaiting US CPI data and the Federal Reserve's monetary policy stance. Recently, energy-related sectors represented by coal have performed well, with coal prices rising due to safety production and weather factors. Monitor their spillover effect on cyclical resource sectors. Core resources (non-ferrous metals + chemicals) are currently in a left-side accumulation phase, awaiting the June FOMC meeting to correct the market's overly aggressive interest rate hike expectations.
Additionally, one can pay attention to the recovery of thematic stocks in stages, focusing on directions where policy and news converge, such as computing-power-grid synergy, commercial aerospace, and robotics.
Next, let's review the news over the weekend.
[State Council Executive Meeting: Further strengthen forward-looking layout based on the characteristics of future industries.]
[Wuxi: Must seize the day with a sense of urgency and responsibility to expand wafer manufacturing, enhance advanced packaging and testing, transform equipment and materials, and tackle emerging fields.]
[Ministry of Housing and Urban-Rural Development Draft Regulation: Allows withdrawal of housing provident fund under one of nine specified circumstances.]
[CSRC Chairman Wu Qing: Continuously improve the regulatory mechanism for programmatic trading, resolutely crack down on illegal activities such as market manipulation and disruption of market order.]
[Friday's Bloody Sell-off on Wall Street: Three Major Reasons Summarized]
First, the weak earnings report from Broadcom earlier in the week triggered shockwaves. Second, strong non-farm payroll data dampened market confidence in Fed rate cuts within the year. Third, the upcoming massive SpaceX IPO is forcing investors to free up more capital.
[US Government Considers Taking Stakes in AI Companies, Having Them "Voluntarily Transfer Shares to the Government."]
[Gold Jewelry Prices Fall Back to Late 2025 Levels]
International gold prices corrected significantly on Friday, breaking below the $4,400 per ounce level, with domestic brand gold jewelry prices falling in sync. On January 29 this year, the per-gram prices for Chow Sang Sang, Lao Miao Gold, and Lao Feng Xiang gold jewelry were 1,708 yuan, 1,722 yuan, and 1,713 yuan, respectively. Compared to their annual highs, the per-gram prices for these three brands have fallen by 393 yuan, 401 yuan, and 397 yuan, respectively, all representing a 23% decline. This also erases all gains made this year, bringing prices back to levels seen at the end of 2025.
Finally, key events for the coming week.
June 8, Monday
State Council Information Office briefing on the "15th Five-Year Plan for Urban Renewal."
June 9, Tuesday
Apple's 2026 Worldwide Developers Conference (WWDC 2026), from June 9 to 13, Beijing time.
June 10, Wednesday
National Bureau of Statistics releases May CPI and PPI monthly reports.
The 10th International Hydrogen and Fuel Cell Vehicle Conference, June 10-12.
June 11, Thursday
Opening of the 2026 FIFA World Cup (USA, Canada, Mexico).
June 12, Friday
Elon Musk's SpaceX officially lists on the stock exchange, setting a global IPO fundraising record with $75 billion.
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