To The Moon

The style and risk appetite of the A-share market have abruptly changed! In the morning session, the three major A-share indices suddenly turned from gains to losses, collectively dipping into negative territory, with the ChiNext Index falling nearly 1%. The Sci-Tech Innovation AI ETF once rose 2% before turning negative. At the same time, the dividend sector reversed from losses to gains, while the number of rising stocks in the market also decreased to fewer than 2,000. Concurrently, two variables representing risk appetite converged. Firstly, against the backdrop of escalating geopolitical risks and a falling US dollar index, gold and silver futures and spot prices surged significantly, redirecting capital flows; secondly, popular stocks collectively plummeted, with the Satellite ETF tumbling nearly 5%, indicating a significant cooling off of speculative fervor. The market appears to be shifting towards a defensive stance. Volatility intensified during Monday's morning session. The Shanghai Composite Index initially saw a collective surge but experienced a sudden sell-off after 9:40 AM. The ChiNext Board and the STAR Market both turned negative, and the Shanghai Composite Index also underwent a noticeable pullback, whereas the Dividend Index saw an uptick. On the market surface, risk appetite also changed markedly. Notably, the FTSE China A50 Index Futures, which had previously declined for nine consecutive sessions, saw their gains widen to 1% in the morning. First, the number of declining stocks increased significantly, with popular sectors and individual stocks experiencing collective sell-offs. Around 10:00 AM, sectors like semiconductor chips, commercial aerospace, robotics, and AI applications led the declines. The number of falling stocks across the Shanghai, Shenzhen, and Beijing exchanges approached 4,000, with the number of stocks hitting the daily downside limit once reaching 17. Previously soaring concept stocks, such as commercial aerospace play CICT Mobile and space photovoltaic concept stock DR Laser, both saw substantial corrections. Second, non-ferrous metals surged across the board, led by gold and silver. The main Shanghai silver futures contract once hit the daily limit-up, gaining 17%; the main platinum futures contract on the Guangzhou Futures Exchange rose nearly 11%. Spot gold rose over 2% to $5,088.39 per ounce, while spot silver jumped over 5% to $108.4 per ounce. The precious metals sector led gains at the open, with Hunan Gold, Fuda Alloy, and Yuguang Gold and Lead hitting the daily limit-up at the opening. Stocks like Sichuan Gold, Hengbang Shares, Xiaocheng Technology, and Hunan Silver rose over 5%. Lao Feng Xiang's stock price once increased by 14%. Recently, the narrative logic of "strategic materials" has continued to ferment in the capital markets. The related changes may have been triggered by a sharp decline in the US dollar index. This morning, the US dollar index once fell below 97. The foreign exchange market on Friday and this morning also experienced significant volatility, with uncertainties sparked by the Japanese yen continuing to expand. This morning, the USD/JPY rate fell 1% to 154.14. Japan's top currency official, Masato Kanda, stated that appropriate foreign exchange measures would be taken based on the Japan-US joint statement, maintaining close contact with the US regarding forex, but declined to comment on whether there was market intervention. How will A-shares perform? Indeed, market uncertainties have recently intensified. On one hand, external variables persist, the narrative logic in capital markets has noticeably weakened, and corresponding stock market valuations are not cheap. On the other hand, related hot sectors in the domestic market have also been pushed to extremes. In contrast, traditional sectors are positioned at relatively low levels. Furthermore, according to China Securities Co., Ltd. data, stock-based ETFs witnessed outflows of approximately 450 billion yuan over the past two weeks, indicating significant structural divergence. Broad-based ETF outflows exceeded 570 billion yuan, with CSI 300 ETF outflows surpassing 320 billion yuan; however, sector-themed ETFs still saw inflows of around 110 billion yuan, with TMT and cyclical resource-related ETFs attracting inflows of about 50 billion yuan and 40 billion yuan, respectively. CITIC Securities believes that as market confidence continues to recover, sectors that are at relatively low levels, have a compelling narrative, and are not heavily weighted in broad indices are expected to see repair. The opportune time for increasing allocations in the consumption chain is from now until around the Two Sessions, primarily driven by expectation trades. The property chain may also experience significant repair during this phase, and building materials sectors less sensitive to domestic new project starts have already begun to move. Under the fundamental premise of "re-pricing resources + traditional manufacturing weights," a core portfolio built around chemicals, non-ferrous metals, new energy, and power equipment remains an anti-anxiety allocation choice amid the contradiction between "investors longing for gains" and regulatory counter-cyclical adjustments. On this basis, one can opportunistically increase allocations to non-bank financials (securities, insurance) while enhancing returns through some domestic demand or high-growth segments. China Securities Co., Ltd. contends that since the "9·24" policy announcement, the overarching tone of capital market policies remains positive. Recent active cooling measures do not alter this fundamental tone but aim to regulate the pace. Furthermore, the implementation of these policies demonstrates greater maturity and foresight, which helps maintain rational capital and build a slow-bull market structure; in fact, this round of market performance is also the slowest rising cycle in A-share history. They advise adhering to the dual main themes of "technology + resource stocks."