Since October, every single day has been almost unbearable for investors holding tech stocks. In just three months, the STAR 50 Index and the ChiNext Index have fallen by more than 40%. We have fully witnessed a cycle in which chips went from being wildly concentrated to completely falling apart, and such a drawdown would be painful for anyone to endure. Now that things have come to this, are the optimists still present? Has the bottom already been "smashed" out? Beyond the agony of the turbulence, what else can we do? In this difficult game, we still need to face reality and reclaim the initiative from passive waiting.
Is it cheap enough now?
This round of decline has indeed been violent, but from an optimistic perspective, some companies that were originally bubbled have seen their cost-effectiveness begin to emerge after being generally discounted by 50%. Of course, the standard for measuring whether something is cheap is not the stock price or index level, but valuation. The CSI 300's forward price-to-earnings ratio is 11.9 times and its forward price-to-book ratio is 1.1 times, both lower than the averages of the past ten years (12.1 times and 1.2 times), and down 19.0% and 15.5% respectively from their highs during the year. The ChiNext Index is even more extreme, with a forward P/E of 22.9 times, which is 1.2 standard deviations below its historical average and sits at the 4.7th percentile over the past decade, meaning that periods cheaper than now have accounted for less than 5% of history. Chart: The ChiNext Index's forward P/E is at a historical low. Note: Data as of October 23, 2026. Source: Wind, Go-Goal, CICC Research Department. There are also two angles that are more convincing than simply looking at the P/E ratio. The first is the stock-bond comparison. The current 10-year government bond yield is 1.6%, at a historical low, while A-share dividend yields have clearly rebounded after the correction. The stock-bond relative attractiveness index calculated using dividend yields and government bond yields is now 184%, above the 90th percentile of the past five years. Relative to bonds, the cost-effectiveness of stocks has already reached the most favorable top 10% range of the past five years. The second is a horizontal comparison across global markets. The valuation levels of the CSI 300 and the Hang Seng Index are not only significantly lower than those of the S&P 500 and the Nikkei 225, but also lower than those of emerging markets such as India. Looking across major global markets, Chinese assets are still in the cheaper tier. Chart: International valuation comparison. Note: Data as of October 23, 2026. Source: FactSet, CICC Research Department.
A rebound won't be that easy
Valuations not being expensive does not mean this is the moment to buy. We must face a more realistic problem: recovering losses through a rebound is much harder than imagined. After a 10% decline, a rebound is enough to break even, and we can regard that as a normal fluctuation; but after a 40% decline, a gain of 67% is needed to break even, and the upward momentum required is no longer something a simple oversold bounce can achieve. Chart: The gain needed to break even after a decline. Source: CICC Wealth Management Product and Solutions Headquarters. As of October 27, the STAR 50 and ChiNext Index had retreated 43.2% and 41.7% from their highs, corresponding to a need to rise more than 70% to recover, and every rebound above will encounter a batch of selling orders waiting to get out of losses. What is even more painful is that, as industrial trends shift, the next market hotspot may switch again, and investors holding old assets may not receive a ticket to the new market. The lesson from five years ago is vivid: the "Mao Index" and "Ning Combination," which hit record highs in 2021 and were regarded as core A-share assets, still have not risen back to their previous highs. Chart: The Mao Index and Ning Combination hit historical highs in early 2021. Rather than waiting for an "imagined" strong rebound, a more pragmatic approach is to give up betting on specific tracks, allocate through broad-based funds, and exchange time for space.
What are you really earning when you buy the dip?
Why is buying the dip after a crash called "catching a falling knife"? Because trying to profit from price differences during a decline is essentially betting against the trend. This is not "picking up a bargain," but betting that tomorrow's price will be higher than today's. From another angle, it becomes much clearer: do not guess the index level, only ask whether the price is already cheap enough. When valuations fall into historical lows and a margin of safety begins to appear, then build positions in batches and wait for the returns that time brings. We compiled the lowest closing levels in the month of eight important bottoms since 2015, as well as the performance in the following 12 months: the CSI 300 rose in 8 cases, with a median gain of 19.4%; the ChiNext Index rose in 6 cases, with a median of 26.2%. Facts have proven that buying at extremely low valuations actually has a decent win rate, provided you give it one year, not one week. Table: Index performance one year after each low since 2015. Source: Wind, CICC Wealth Management Product and Solutions Headquarters. We always tend to overlook the variable of time. What is called buying the bottom is not about earning money from "it rises tomorrow," but from "cheap enough" plus "long enough." So what truly needs to be answered is not "is this the bottom now," but more individual questions: how long can you leave this money unused? How long are you willing to hold it? What proportion of equity assets do you plan for? Do not buy the bottom out of fear, but you can allocate because you believe in the long term.
What happened after the rescue?
Every major decline follows a similar script: large capital enters, broad-based ETFs are bought, and institutions announce self-purchases. This time is no different. According to Wind statistics, since October, stock ETFs have continued to see net inflows exceeding 360 billion yuan; among them, broad-based ETFs saw net inflows of 155.2 billion yuan during the full week from October 12 to 16. On October 22, four public fund companies—E Fund, China AMC, Fullgoal, and China Universal—each used 200 million yuan to purchase their own active ETFs, while Morgan Fund's shareholder contributed 75 million US dollars (about 500 million yuan), totaling about 1.3 billion yuan. Did these funds make money historically? The answer is two-sided: after the self-purchase wave in April 2022, the CSI 300 rose about 20% in two months; after the self-purchase wave in January 2024, the Shanghai Composite Index rebounded from 2635 points to 3174 points and lasted for three months; but after the self-purchase wave in October 2022, the market probed lower for another month before truly bottoming. Therefore, support funds are not the starting gun for a V-shaped reversal; they are more like a signal that "someone is taking the other side at this level." What they change is the slope of the decline, not the timing of the turning point. Treating them as buy-the-bottom instructions will mostly lead to disappointment; treating them as long-term capital expressing its stance with real money is the useful information. The premise of compounding is stable growth, not one beautiful bottom-fishing trade. Fighting high volatility depends not on courage, but on allocation. Returning to the original question: are the optimists still present? At least judging by price, valuations have already fallen to historical extreme levels; as third-quarter reports are gradually disclosed, marginal improvements in prosperity are also beginning to be confirmed by fundamentals, and medium-term attractiveness is emerging. Of course, being cheap does not guarantee that it will rise tomorrow, but it does raise the win rate for the next three years or five years. You may not be optimistic, but there is no need to be overly pessimistic. May you have discipline amid the noise, a plan amid panic, and in the long wait, still be willing to remain someone who stays in the game.
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