To The Moon

Opening data shows that on October 29, the Shanghai Composite Index opened 0.13% lower at 3,676.77 points, the Shenzhen Component Index opened 0.82% lower at 11,379.00 points, and the ChiNext Index opened 1.46% lower at 2,596.22 points. The STAR 50 Index opened 0.87% lower at 1,271.81 points. As of 9:31 AM, a total of 1,260 stocks in the Shanghai and Shenzhen markets were advancing, 4,020 were declining, and 297 were flat.

Sectors leading gains included papermaking, coke, shipping and ports, leisure food, non-metallic materials, city commercial banks, and lab-grown diamond concepts. Sectors leading declines included components, optical communications, computing hardware, PEEK materials concepts, and physical AI concepts.

Market Overview

All three major indices opened collectively lower, with the Shanghai Composite down 0.13%, while the Shenzhen Component and ChiNext declined 0.82% and 1.46% respectively, with growth-oriented boards opening significantly weaker than the main board. After the open, the indices dipped slightly. As of 9:31 AM, the Shanghai Composite stood at 3,668.42 points, down 0.35%; the Shenzhen Component was at 11,353.94 points, down 1.04%; the ChiNext Index was at 2,590.24 points, down 1.69%; and the STAR 50 was at 1,261.94 points, down 1.64%.

Structurally, a high-to-low rotation was evident: low-position cyclicals such as papermaking, coke, shipping and ports, along with city commercial banks and the banking sector, moved against the trend. The Baltic Dry Index rose 1.88% to 2,652 points on October 28, with the Capesize index gaining 4.97%, driving activity in the shipping and ports sector. The computing power chain that led gains in the previous trading session collectively gave back profits, with components, optical communications, computing hardware, PEEK materials, and physical AI concepts among the biggest decliners. Market breadth was weak, with 1,260 stocks advancing and 4,020 declining in the Shanghai and Shenzhen markets, representing an advance ratio of 22%. There were 14 stocks hitting the daily limit up and zero hitting the limit down, with active capital concentrated in a small number of low-position sectors.

Overnight News Highlights

The Federal Reserve kept interest rates unchanged: On October 28, the Fed voted 10 to 2 to maintain the federal funds rate target range at 3.75% to 4%, with two committee members advocating for a 25 basis point rate hike. The three major U.S. stock indices rose for a third consecutive trading day, with the Dow up 0.19%, the Nasdaq up 0.27%, and the S&P 500 up 0.28%.

Policy-based financial instruments fully deployed: As of October 28, the 800 billion yuan in new policy-based financial instruments for 2026 had been fully deployed. The three policy banks deployed 365 billion yuan, 120 billion yuan, and 315 billion yuan respectively, with all funds used to supplement project capital. Key investment areas included artificial intelligence, the digital economy, green and low-carbon development, and biomedicine.

Memory chip sector momentum continues: SK Hynix reported third-quarter revenue of 104.62 trillion Korean won, surpassing 100 trillion won for the first time, with operating profit growing 5.57 times year-on-year. The company also announced an additional shareholder return of approximately 45 billion U.S. dollars. Its U.S.-listed shares rose 13.3% on October 28, driving gains in memory stocks such as SanDisk and Micron Technology, extending the semiconductor sector's rally.

Trend Analysis

In the previous trading session, the Shanghai and Shenzhen markets rose broadly on higher volume, with turnover of approximately 1.63 trillion yuan. The ChiNext Index gained 3.40%, led by technology and growth stocks. On October 29, the three major indices opened collectively lower, with the ChiNext and STAR 50 posting the largest opening declines. Capital rotated from the computing power chain back into low-position cyclicals such as papermaking, coke, and shipping and ports, as well as the banking sector. Overnight, the Fed kept rates unchanged, but two members advocated for a hike, pushing the 10-year U.S. Treasury yield up 2.5 basis points to 5.022%, weighing on high-valuation growth stocks. The memory chain remained strong overseas, while related A-share sectors saw profit-taking after a rapid prior rally.

Institutional views are divided: firms such as Jufeng Investment Advisory believe recovery momentum remains, but whether trading volume can continue to expand and third-quarter earnings materialize are key validation points. The strategy team at Huaan Securities judges that the market will likely continue to trend weak overall in late October. Short-term consolidation may persist, with directional selection potentially awaiting confirmation from trading activity and third-quarter earnings.