Thursday (October 22) saw A-shares adjust throughout the day, with all three major indices weakening collectively, and the ChiNext Index opening low and falling over 4%. Combined turnover for the two markets was approximately 1.53 trillion yuan, an increase of about 99.4 billion yuan from the previous day, with nearly 5,000 individual stocks declining across the market.
Hong Kong stocks were similarly sluggish, with technology shares undergoing deep corrections, and the Hang Seng Tech Index hitting a stage low. AH technology assets weakened across the board, with AI computing power and optical modules leading the declines. The underlying index of the high-"light" ChiNext Artificial Intelligence ETF Huabao (159363) fell 6%, giving back its year-to-date gains and hitting a new low for the year, drawing high capital attention. Hong Kong hard tech—the underlying index of the Hong Kong Stock Connect Information Technology ETF Huabao (159131)—dropped over 6%.
The innovative drug sector also declined, with Hong Kong stocks undergoing deep adjustments. Combined with market观望 sentiment toward CDMO third-quarter reports and detailed U.S. outbound investment restrictions, pharmaceutical growth stocks came under significant pressure. The underlying index of the Hong Kong Stock Connect Innovative Drug ETF Huabao (520880) fell over 6%, also hitting a stage low, while the underlying index of the Hong Kong Stock Connect Healthcare ETF Huabao (159137) dropped 5.38%.
The dividend high-yield direction bucked the trend and resisted declines, with Industrial and Commercial Bank of China and China Construction Bank hitting historic highs again. The underlying index of the Bank ETF Huabao (512800) once turned positive against the market, closing down just 0.27%, fighting hard to defend the market. ICBC and Agricultural Bank of China's interim dividends totaling over 82.1 billion yuan have landed, and the six major banks have uniformly raised their interim dividend payout ratios to 31%. In a low-interest-rate environment, the appeal of bank dividends is highlighted.
Looking ahead, Guolian Minsheng Securities stated that A-shares may continue to consolidate in the short term, with capital support and earnings verification being key to subsequent recovery. It recommends balancing dividend defense with technology elasticity, and grasping structural opportunities around earnings certainty. Basic allocation can balance portfolio volatility through banks, utilities, and other directions; offensive allocation should combine third-quarter report performance, valuation digestion levels, and capital absorption, focusing on booming segments in semiconductors, communications, and the computing power industry chain.
ICBC and CCB Top 3 Trillion, 11 Stocks Hit New Highs Since September! Face the Current Value of Bank Allocation
A-shares plunged in batches, but the banking sector was active against the market, with Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank rising over 1%, while Chongqing Rural Commercial Bank, Industrial Bank, and others followed. ICBC and CCB tenaciously hit historic highs in a weak market, with total market capitalizations neatly standing at 3 trillion yuan, taking the top two spots in A-share market value, releasing a strong signal. The underlying index of the Bank ETF Huabao (512800) once turned positive against the market, closing down just 0.27%, fully demonstrating its defensive power.
Since September, bank stocks have continued to buck the market trend, with multiple stocks hitting historic highs. Data from East Money Choice shows that during this period, 11 stocks including Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Bank of Communications, China CITIC Bank, Bank of Hangzhou, Bank of Changsha, Bank of Jiangsu, Bank of Nanjing, Bank of Chengdu, and Bank of Qingdao have successively set historic highs.
The strong banking rally may be related to three factors: First, fundamentals are marginally recovering. Interim reports show the industry's overall net interest margin rebounded for the first time in four years, asset quality pressure eased, and profit resilience was verified. Second, interim dividends have become normalized, with the six major state-owned banks rarely collectively raising dividend payout ratios to 31%, making fixed-income-like allocation value prominent in a low-rate environment. Third, market style favors defense, combined with related real estate credit support policies, driving sector valuation repair.
Entering the third-quarter report disclosure window, although overall credit demand has not yet trended upward, accelerated government bond issuance, increased PSL, and the implementation of policy-based financial tools are expected to support the stabilization of high-quality banks' interest margins. Western Securities expects that in the first three quarters of 2026, listed banks' overall revenue and profit growth will improve compared to the first half, verifying that industry fundamentals are moving from bottoming out to improvement, with non-interest income growth elasticity and solid provisions jointly driving further sector valuation repair.
Currently, all 42 listed banks in A-shares remain below book value, with the sector's overall price-to-book ratio (PB, LF) at only 0.73 times and a dividend yield of 4.65%, continuously enhancing its appeal to safe-haven funds in volatile markets and long-term funds such as social security and insurance capital. CITIC Securities believes that against the backdrop of still-high market volatility, banks' earnings stability is expected to further solidify their stable return attributes. The banking sector is expected to be revalued from "high-dividend defensive assets" to "high-certainty equity assets," and the sector will continue to演绎 an upward valuation direction.
Rising with the trend, combining offense and defense! The Bank ETF Huabao (512800) passively tracks the CSI Bank Index, with constituent stocks encompassing all 42 listed banks in A-shares. The top ten weighted stocks gather large-cap leaders such as Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of Communications, and cover growth-oriented joint-stock banks and city/rural commercial banks such as China Merchants Bank, Industrial Bank, and Bank of Jiangsu, making it an efficient investment tool for tracking the overall banking sector行情. Off-market investors can follow the feeder funds (Class A: 240019; Class C: 006697).
Optical Module Leaders Continue to Plunge, ChiNext AI Index Gives Back Year-to-Date Gains, Hitting a Stage Low! After the Oversold, Risk or Opportunity?
Computing power hardware stocks weakened collectively, with optical module leaders falling deeply. The underlying index of the high-"light" ChiNext Artificial Intelligence ETF Huabao (159363) fell 6% in a single day, turning its year-to-date gain from positive to negative, hitting a new low in this round of adjustment, with high capital attention. Weighted stock "Yi Zhong Tian" continued to plunge, with Eoptolink Technology dropping over 12%, its market value falling below the 400 billion yuan mark, while T&S Communications and Zhongji Innolight fell over 8%. The memory storage sector also weakened, with Xiechuang Data dropping over 8% and Longsys falling over 2%.
The continued plunge in the computing power hardware sector is mainly suppressed by four aspects: First, tech giants' earnings signals diverged, triggering doubts. Tesla cut capital expenditure, Meta increased AI bets, and Lam Research's guidance fell short of expectations. Contradictory signals from giants made the market question the sustainability of the AI rebound. "Worried about increases, worried about decreases"—the AI capital expenditure narrative may no longer please the market. Second, previous gains were too large, and profit-taking continued. The sector's valuation was previously at a high level, and once the adjustment began, the willingness to take profits was strong, with capital shifting to new hotspots like humanoid robots, and the seesaw effect贯穿 the entire adjustment. Third, market sentiment retreated, and the sector passively补跌. A-share turnover shrank, the decline broadened, Hong Kong chip stocks and Asia-Pacific stock indices weakened simultaneously, and under shrinking risk appetite, computing power hardware lacked independent stabilization momentum. Fourth, external liquidity disturbances pressured high valuations. U.S. Treasury yields fluctuated at high levels, and the Federal Reserve's hawkish statements were repeated. Growth sectors are sensitive to interest rates, and valuation repair continued to be suppressed.
Overall, market analysis points out that in the first half of the year, some segments of the AI industry chain rose quickly and trading was crowded. When overseas AI capital expenditure节奏 and model commercialization progress show periodic fluctuations, valuation returning to fundamentals is the normal functioning of market mechanisms. This calibration will, in the long run, be more helpful to truly high-quality enterprises with technical barriers and order fulfillment capabilities. This round of computing power hardware selloff is more likely an adjustment at the sentiment and capital level rather than a deterioration in industry fundamentals. During the adjustment, low-position layout opportunities are worth attention. For core segments represented by optical modules and computing infrastructure, the volume ramp-up pace of 1.6T high-speed optical module products is clear, and leading companies' revenue and profit growth continue to verify industry prosperity. The AI industry chain will diverge internally, and leading companies with global competitiveness still have medium-to-long-term allocation value after valuation digestion.
To layout optical module leaders + AI applications, consider the ChiNext Artificial Intelligence ETF Huabao (159363) and off-market feeder funds (Class A 023407, Class C 023408), focusing on optical module CPO leaders while covering AI applications. The underlying index's "Zhongji Innolight + Eoptolink Technology + T&S Communications" content exceeds 35%, making it a core flagship of AI computing power.
Triple Negative Factors Strike Suddenly, Hong Kong Stock Connect Innovative Drugs "Slam on the Brakes"! 520880 Underlying Index Plunges Over 6% to a Stage Low! Low-Position Layout or Continued Waiting?
Hong Kong stocks underwent deep adjustments, with the Hang Seng Index and Hang Seng Tech Index falling 3% and 5%, respectively hitting 3-month and nearly 1-year lows. The Hong Kong Stock Connect innovative drug sector, which had risen for three consecutive days, fell with the market. The underlying index of the Hong Kong Stock Connect Innovative Drug ETF Huabao (520880) closed down 6.12%, refreshing a nearly 3-month low, and has now lost all moving averages. Among the 50 innovative drug companies covered by 520880, 49 were in the red. Weighted stocks Akeso and Zai Lab both plunged over 9%, Innovent Biologics and KeyMed Bio-B fell over 8%, Sino Biopharmaceutical dropped nearly 7%, and Hansoh Pharmaceutical fell 7.33%.
Why did the Hong Kong Stock Connect innovative drug行情 suddenly take a sharp turn? Analysis suggests three negative factors may have resonated. First, major Hong Kong stock indices all fell sharply, with systemic panic sweeping the entire market, washing out all short-term profit-taking accumulated from recent consecutive gains in Hong Kong Stock Connect innovative drugs. Second, the ESMO conference opens tomorrow (October 23), and market trading logic switched dramatically—from previously "buying expectations" to rapidly "selling facts," to avoid potential risks of data falling short of expectations. It is worth noting that this "withdrawing funds before the conference" pattern has appeared multiple times in the history of the innovative drug sector. Third, on the capital side, from October 13 to now, southbound funds have seen continuous net outflows, with the pharmaceutical and biotech sector leading net outflows, and the deteriorating liquidity environment suppressing sector valuations.
At the current stage, where to go? First, it is necessary to clarify that the long-term logic of innovative drugs remains solid—BD going overseas is highly prosperous, profit inflection points are spreading, and AI empowers R&D efficiency improvement. The current disconnect between sector stock prices and fundamentals urgently needs to change. Strategically, one may consider insisting on layout at low positions, waiting for market sentiment to improve, capital to return, and major positive catalysts. The upcoming third-quarter reports are expected to show most companies achieving high-speed growth; the year-end is the peak period for BD transactions, and blockbuster varieties going overseas are also expected to boost sector sentiment.
For investment tools, pay attention to the T+0 "sharp tool"—Hong Kong Stock Connect Innovative Drug ETF Huabao (520880): its underlying index is 100% allocated to innovative drug R&D companies, with nearly 70% of its position bet on innovative drug R&D leaders. Off-market feeder fund: 025221.
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