The past trading week (August 24-28) saw A-share markets dip before rallying, establishing the "second leg" of the recovery that began with the late-July rebound. After the Shanghai Composite Index tested the 3,850-point support level without breaking down, it launched another offensive toward the annual moving average near 4,000 points. The ChiNext Index and the Wind All-A shares Index also exhibited notable "second pullbacks." More typical of this trend is the Science and Technology Innovation 50 Index, which has formed what appears to be a W-bottom pattern on its daily chart.
However, appearing similar doesn't mean confirmation. These widely recognized bullish patterns can only be validated after the market actually moves through them—and next week, spanning the final trading day of August and the first four sessions of September, will likely be the proving ground. That said, candlestick patterns represent just one dimension of how we perceive and understand trends. Incorporating multi-dimensional information on news flow, capital positioning, and market sentiment typically leads to more accurate judgments.
Moreover, we cannot blindly trust any single moment's assessment. Rather, we should build response plans based on our judgments while continually refining both assessment and execution according to real-time market action to achieve "dynamic correctness." The underlying principle isn't complicated—what's challenging is maintaining confidence and patience. Here are some of the latest institutional viewpoints for reference.
Where To Begin
According to Founder Securities, over the past two months the market first declined then staged a oversold rebound, with both phases running nearly identical timeframes. The rebound's magnitude reached roughly half of the previous decline's extent. The market's bottoming process has entered its latter half, with directional resolution approaching in September. From a fundamental perspective, the economy is gradually entering peak season, policy implementation effects following the July Political Bureau meeting are being verified, and the window for a new round of incremental policy measures is opening.
On liquidity, the Fed's monetary policy direction for September and the full year will become clearer. Given persistently high U.S. Treasury yields and approaching midterm elections, the probability of a rate hike remains low. Regarding risk appetite, market turnover has fallen to roughly half of its peak level, which can essentially be considered the low-volume threshold for this adjustment round, suggesting the index bottom is becoming increasingly defined. Additionally, the upcoming window for a new round of head-of-state diplomacy warrants close attention for its potential impact on market risk sentiment.
On market structure, the core determinant of index movement remains technology—similar to how new energy drove markets during 2021-2022. Attention should focus on which sub-sectors can reach new highs and drive overall tech sentiment. Zhongtai Securities' strategy team states that looking ahead to September, the A-share rebound window should gradually open, and investors "can be more proactive." On win probability, in the baseline scenario U.S. Treasury yield risks remain relatively contained, and domestic economic policy has room for reinvigoration.
On risk-reward, the market's median valuation (PE TTM) and ERP both sit at favorable year-long levels. In terms of allocation strategy, the firm believes there is room for market rebound: within AI, focus on domestic supply chains; outside AI, emphasize export chains and El Ni帽o beneficiaries. First, the long-term industry trend in AI continues to evolve; as U.S. bond yield risks ease, tech stocks represented by AI are poised to rebound. However, near-term overseas markets may lack new commercialization narratives, making domestic chains comparatively more attractive. Second, outside AI, they recommend export-related sectors (power equipment, chemicals) and El Ni帽o beneficiaries (agriculture/forestry/fishing, home appliances).
Leadell Fund similarly indicates that indices remain within the rebound cycle, and investors should consider balanced allocation. The earlier TMT correction was primarily driven by crowding reduction combined with mid-year report pricing transitions, not the invalidation of industrial logic. Given that technology investment remains deeply entrenched, the tech sector will likely enter a period of range-bound volatility. TMT sector risks have been largely released, presenting short-term rebound opportunities. Moreover, the mid-year earnings verification window may create rotation opportunities for other sectors, supporting a balanced allocation approach. For rotation directions, monitor technology, dividend-yield (financials, coal, power), and innovative drugs. Additionally, with small-cap and micro-cap stocks having rebounded first after extreme microstructure imbalance, partial allocation after rebalancing is also worth considering.
Some institutions, however, are choosing to sit out tech in September. Guojin Securities points out that as AI investment return expectations decline, tech companies' massive debt expansion has transformed from a solution into part of the problem. The sustainability issues of developed-nation debt expansion discussed since 2024 are resurfacing. The asset-reserve function of physical assets will receive growing attention; if tight-money expectations reverse, the recovery in non-U.S. physical demand is also worth anticipating. In terms of specific allocation recommendations: first, the "return to America" narrative is slowing, favoring non-ferrous metals (gold, copper, aluminum) and energy (coal, oil, tanker shipping); second, dividend-yield styles benefit from switching by absolute-return investors—high-dividend, low-volatility, stable-cash-flow dividend assets remain the core re-entry direction for absolute return capital; third, the resonance between southern-nation stories and China's manufacturing strength is taking shape, with attention on construction machinery, grid equipment, and refining industries.
Policy Developments To Track
The People's Bank of China and the National Financial Regulatory Administration jointly issued the "Opinions on Reforming and Improving Real Estate Credit Management to Accelerate Building a New Real Estate Development Model." The document proposes extending individual housing loan terms from a maximum of 30 years to 40 years, offering greater flexibility for both borrowers and lenders, with specific terms determined by negotiation between homebuyers and commercial banks. Additionally, the Ministry of Housing and Urban-Rural Development, the Ministry of Natural Resources, and the National Financial Regulatory Administration jointly issued the "Notice on Improving Commercial Housing Sales Systems."
The National Financial Regulatory Administration, together with relevant departments, is also reforming and improving real estate financing systems with the issuance of five management measures, plus the CSRC has formulated the "Opinions on Capital Market Support for Building the New Real Estate Development Model," which proposes supporting re-financing for listed real estate developers and the use of share issuances, directional convertible bonds, and cash tools for acquiring real estate-related assets.
Industry Highlights: Surge In Demand, Satellite Milestones, And Memory Breakthroughs
According to CCTV Finance, server high-speed computing requires stronger power delivery, faster data transmission, and more efficient heat dissipation—copper plays a crucial role in all of these areas. Market estimates suggest that AI-specific high-end copper foil demand will reach approximately 24,000 tonnes in 2026, representing roughly 260% year-over-year growth. Meanwhile, CCTV News reports that China has achieved a significant breakthrough in lunar-Earth laser communication testing, successfully establishing a two-way laser link across more than 400,000 kilometers of space between the Earth and the Moon—marking the first-ever two-way high-speed laser communication at this distance. This milestone signifies that China's space laser communications have officially advanced from near-Earth orbit into the cislunar domain.
On the technology front, ChangXin Memory Technologies has officially announced mass production of LPDDR6 memory, drawing congratulations from Xiaomi's Lei Jun on social media.
Global Market Signals
Fed Chair Wush expressed hawkish signals, stating that the Fed must contain prices, alleviating some bond market concerns about the credibility of its inflation fight. This pushed two-year U.S. Treasury yields up 10 basis points to 4.33% at one point, while 30-year yields fell approximately 2 basis points to 5.17%. The flattening of the yield curve reflects market expectations that the Fed may need to raise short-term rates. Corn and wheat prices also hit three-year highs simultaneously. HSBC notes the agricultural supply chain faces multiple shocks, including the impact of Middle East conflicts, recent regional war escalations, and extreme weather events such as Northern Hemisphere heatwaves and intensifying El Ni帽o effects.
Upcoming Week's Calendar
Monday, August 31: The National Bureau of Statistics releases the monthly PMI report, and it is the deadline for A-share listed companies to disclose semi-annual reports. Tuesday, September 1: The "2026 National Essential Medicines List" officially takes effect, and the battery consumption tax policy begins, ending the lithium battery tax exemption. Wednesday, September 2: U.S. August ADP employment figures are released (expected lower than previous reading). Thursday, September 3: The 2026 World Power Battery Conference convenes in Yibin, Sichuan Province, running September 3-4. Friday, September 4: U.S. August unemployment rate data are released (expected higher than previous reading), along with a series of related figures.
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