To The Moon

A sudden change has occurred in the style and risk appetite of the A-share market! During the morning session, the three major A-share indices abruptly turned from gains to losses, collectively dipping into negative territory, with the ChiNext Index falling nearly 1%. The Sci-Tech Innovation AI ETF initially rose 2% before also turning negative. Concurrently, the dividend-focused sector reversed from losses to gains, while the number of advancing stocks in the market shrank to fewer than 2,000. Simultaneously, two key variables representing market risk appetite converged. First, against a backdrop of escalating geopolitical risks and a falling US Dollar Index, gold and silver futures and spot prices surged significantly, redirecting capital flows. Second, a collective plunge in popular stocks occurred, with the Satellite ETF tumbling nearly 5%, indicating a notable cooling-off of speculative fervor. The market appears to be shifting towards a defensive posture. Market volatility has intensified. In Monday's early trading, the Shanghai Composite Index experienced a collective upswing, but after 9:40 AM, a sudden wave of sell-offs emerged. The ChiNext Board and the Star Market collectively turned negative, and the Shanghai Composite Index also underwent a noticeable correction, while the Dividend Index conversely saw an uptick. Market dynamics revealed a clear shift in risk appetite. It is noteworthy that the FTSE China A50 Index Futures, which had previously recorded nine consecutive days of declines, saw their early gains expand to 1%. Firstly, the number of declining stocks increased significantly, with popular sectors and individual stocks leading the downturn. Around 10:00 AM, sectors such as semiconductor chips, commercial aerospace, robotics, and AI applications were among the biggest decliners. Nearly 4,000 stocks across the Shanghai, Shenzhen, and Beijing exchanges fell, with the number of stocks hitting the daily downward limit briefly reaching 17. Previously high-flying concept stocks like CICT Mobile (commercial aerospace) and DR Laser (space photovoltaics) experienced substantial pullbacks. Secondly, non-ferrous metals surged across the board, led by gold and silver. The main silver futures contract on the Shanghai Futures Exchange once hit the daily upper limit, soaring 17%; the main platinum futures contract on the Guangzhou Futures Exchange rose nearly 11%. Spot gold climbed over 2% to $5,088.39 per ounce, while spot silver jumped over 5% to $108.4 per ounce. The precious metals sector led the gains at the open, with Hunan Gold, Fuda Alloy, and Yuguang Gold and Lead hitting the daily upper limit straight away. Stocks like Sichuan Gold, Hengbang Shares, Xiaocheng Technology, and Hunan Silver rose over 5%. Laopu Gold's stock price surged as much as 14% at one point. Recently, the narrative logic of "strategic materials" has continued to gain traction in the capital markets. These related changes may have been triggered by a sharp decline in the US Dollar Index. This morning, the Dollar Index briefly fell below 97. The foreign exchange market witnessed significant volatility both last Friday and this morning, with uncertainties stemming from the Japanese Yen continuing to amplify. This morning, the USD/JPY exchange rate fell 1% to 154.14. Japan's top foreign exchange 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 matters. He declined to comment on whether there had been market intervention. How will A-shares perform? Indeed, market uncertainties have recently intensified. On one hand, external variables persist, the narrative logic supporting capital markets has noticeably weakened, and corresponding stock valuations are not cheap. On the other hand, related hot sectors within the domestic market have been pushed to extremes. In contrast, traditional sectors remain at relatively low levels. Furthermore, according to China Securities Co., Ltd. data, stock-based ETFs witnessed approximately 450 billion yuan in outflows over the past two weeks, indicating significant structural divergence. Outflows from broad-based ETFs exceeded 570 billion yuan, with outflows from CSI 300 ETFs surpassing 320 billion yuan. However, sector-specific thematic ETFs still saw inflows of around 110 billion yuan, with TMT and cyclical/resources-related ETFs attracting approximately 50 billion and 40 billion yuan, respectively. CITIC Securities believes that as market confidence continues to recover, sectors that are at relatively low levels, can present a compelling narrative, and are not heavily weighted in broad-based indices are likely to see a rebound. They suggest the timing for increasing allocations in the consumption chain is from now until around the Two Sessions, primarily driven by expectation trading. The property chain might also experience significant recovery during this phase, with building materials sectors less sensitive to new domestic construction starts already showing signs of movement. Under the core theme of "re-rating resources + traditional manufacturing pricing power," a foundational portfolio built around chemicals, non-ferrous metals, new energy, and power equipment remains a defensive choice against anxiety amid the contradiction between "investors craving gains" and regulatory counter-cyclical adjustments. On this basis, they recommend adding positions in non-bank financials (securities, insurance) on dips, while enhancing returns through select domestic demand or high-growth sectors. China Securities Co., Ltd. contends that since the "9·24" policy announcements, the overarching tone of capital market policies remains positive. Recent proactive cooling measures do not alter this fundamental stance but are intended to manage the pace. Furthermore, the implementation of these policies demonstrates greater maturity and foresight, which helps maintain rational capital and build a slow-bull market pattern; indeed, this round of market performance is the slowest-rising in A-share history. They advise adhering to the dual main lines of "technology + resource products".