To The Moon

On October 26, the three major A-share indices closed mixed, with the Shanghai Composite finishing higher while the ChiNext Index and Shenzhen Component Index both fell more than 1%. On the board, real estate and oil sectors strengthened, consumer sectors were active, and gaming stocks rose against the trend; on the downside, semiconductor concept stocks weakened. More than 3,100 individual stocks across the market declined. Combined turnover of the Shanghai and Shenzhen markets reached 1.61 trillion yuan, shrinking by 347.5 billion yuan from the previous trading day. Some broad-based ETFs continued to see volume expansion, with the E Fund CSI 300 ETF (510310) exceeding 14 billion yuan in turnover.

After the afternoon open, the market staged a strong rally, with the Shanghai Composite turning positive first, briefly leading investors to believe the market would replicate last Friday's movement. However, after the rally, the Shanghai Composite and the dual-innovation indices diverged. By the close, the Shanghai Composite held gains, while the ChiNext Index fell 1.71% and the STAR 50 dropped 2.23%.

Notably, on the news front, favorable policies for A-shares arrived densely over the weekend. On October 23, the General Office of the State Council issued the "Opinions on Adapting to the Development of Artificial Intelligence Technology to Help Build an Employment-Friendly Development Model," making arrangements for related work. The Opinions mentioned deepening the implementation of the "AI Plus" initiative, encouraging eastern regions to deploy core AI industries, guiding central and western regions to undertake upstream and downstream industries such as data annotation and intelligent terminal manufacturing according to local conditions, and accelerating the formation of new employment growth points in the AI field. It also called for accelerating the cultivation of AI-native enterprises and specialized, refined, distinctive and innovative "little giant" enterprises, and including qualifying enterprises in the scope of special loans to support financial assistance for enterprises, stabilize jobs and expand employment, creating more new jobs and opportunities.

In addition, recent performance of STAR Market listed companies has also been solid. Data shows that as of the evening of October 25, 66 STAR Market companies had disclosed their third-quarter reports for 2026. These 66 companies together achieved operating revenue of 162.046 billion yuan in the first three quarters, up 36.27% year-on-year; combined net profit attributable to parent companies reached 15.385 billion yuan, up 101.38% year-on-year. Cambricon, which performed strongly against the trend today, achieved operating revenue of 9.526 billion yuan in the first three quarters, up 106.76% year-on-year; net profit attributable to parent companies reached 3.715 billion yuan, up 131.49% year-on-year, an increase of 80.38% compared with the full year of 2025. In the third quarter alone, the company achieved net profit of 1.404 billion yuan, setting a new single-quarter high since listing.

So why did the dual-innovation sectors perform weakly in the afternoon? Some brokerages believe the market will still face many disruptions, including uncertainty over Federal Reserve rate hikes, geopolitical conflicts, and an expected marginal decline in market and growth-style earnings growth in the third quarter. The short term may continue to operate weakly overall, but a "meal market" in November is worth anticipating, and there is no need for habitual pessimism. After a round of clear adjustment, overall risk appetite in the A-share market remains low, and directions with more certain earnings growth are better able to attract capital attention.

Although broad-based ETFs overall showed less strength today than last Friday, some ETFs saw obvious volume expansion near the close. The E Fund CSI 300 ETF exceeded 2.6 billion yuan in turnover in the single minute at 14:55. The Huatai-PineBridge A500 ETF saw frequent volume expansion in the afternoon, with full-day turnover exceeding 8.4 billion yuan. Wind data shows that last week, stock ETFs and cross-border ETFs in the Shanghai and Shenzhen markets together saw net inflows of 158.077 billion yuan, with broad-based index ETFs seeing net inflows of 155.2 billion yuan. As of last Friday, nine broad-based ETFs had each recorded cumulative net inflows exceeding 10 billion yuan this month, with the CSI 300, ChiNext Index, and STAR 50 attracting capital pursuit.

Looking again at the market's hot spots for the full day, real estate and oil sectors led gains throughout the session. Last week, crude oil prices broke out of a rangebound trend and rose rapidly, mainly because various signs showed a sharp rise in the possibility of another war conflict between the United States and Iran. The sharp increase in geopolitical risk led the market to price in possible supply losses in advance. Analysts believe the main support for this round of higher oil prices remains supply shortages. At present, a high central oil price level is difficult to shake, geopolitical conflicts have not yet seen substantive easing, and the risk premium is unlikely to fade quickly. The core of current crude oil asset allocation lies in rebalancing between geopolitical risk drivers and continuously revised-down demand expectations.

In real estate, recent data showed that housing prices in 70 large and medium-sized cities continued to repair in September, with the number of cities where new home prices rose month-on-month increasing by 2 from August, and the number of cities where second-hand home prices rose month-on-month increasing by 6 from August. Some brokerages said that there is still significant room for relaxation in core cities' restrictive policies, provident fund loans, urban renewal and other directions. If policy intensity and pace of advancement are further strengthened, the process of stopping the decline and stabilizing the real estate market is expected to accelerate, maintaining an "outperform" rating on the industry.