To The Moon

Right after the Mid-Autumn holiday, the market's morning session saw a deeper pullback.

Market participants scrambled to find reasons: sharp declines in Japanese and Korean markets, rising expectations for an October Federal Reserve rate hike, growing uncertainties in U.S.-Iran negotiations, and so on. Amid these various disruptions, some investors inevitably grew concerned and even chose to hold cash through the holiday.

However, in the view of more market participants and capital market research experts, as the new positioning of China-U.S. relations further expands in substance, the marginal impact of external disruptions will gradually diminish, and the stability of Chinese assets serves as a strong guarantee for capital market certainty.

New China-U.S. Relationship Positioning Expands in Substance

Market experts pointed out, "Don't focus only on isolated uncertainties while overlooking the more important positive shifts in the macro environment."

Economic and trade cooperation is an important component of China-U.S. relations. From September 20 to 23, the Chinese and U.S. economic and trade teams held their eighth round of consultations in New York and Washington, reaching positive consensus and contributing economic and trade outcomes to the meeting between the two heads of state.

The two sides agreed to establish a China-U.S. Trade Council and a China-U.S. Investment Council, and reached a "30 billion for 30 billion" reciprocal tariff reduction arrangement, reducing tariffs on approximately 30 billion U.S. dollars worth of goods imported from each other on a reciprocal basis, with about 90% of each side's products seeing tariffs lowered to most-favored-nation rates. At the same time, an agricultural working group was set up, a China-U.S. AI dialogue was established, and the joint arrangement from the Kuala Lumpur economic and trade consultations was extended to January 10, 2027.

The Ministry of Commerce stated that the China-U.S. Trade Council will provide an important platform and institutional safeguard for both sides to "continuously lengthen the cooperation list and shorten the problem list" in the economic and trade field, helping to build a constructive and strategically stable China-U.S. relationship and creating a stable, predictable policy environment for cooperation between enterprises of both countries.

For the capital market, the stabilization and improvement of China-U.S. relations helps ease external uncertainties and improve risk appetite for capital, providing more stable expectations for sectors such as foreign trade, the export chain, and technology growth. The basic stability of the RMB exchange rate and the continued increase in foreign allocations to Chinese assets also confirm the steady recovery of international investor confidence.

Fundamentals of Tech Stocks Remain Intact

Judging from today's performance of A-shares and overseas markets, the hardest-hit sectors were none other than the technology sectors on the STAR Market and ChiNext.

On the information front, rumors circulated that several U.S. senators proposed the "Preventing Chinese Optical Transceivers from Entering National Security Systems Act," which would list several Chinese optical module companies as restricted suppliers to security systems. In response, a researcher who has long tracked the electronics industry said the relevant bill has not yet taken effect and is merely a proposal. Whether it will actually pass, when it will pass, and its final scope of application all remain highly uncertain. Even if the relevant information materializes, U.S. national security system procurement accounts for only a small portion of the optical transceiver market. Meanwhile, the five-year transition period and exemption clauses stipulated in the bill further buffer any near-term disruptions.

In fact, for any industry, its long-term upward or downward trend is ultimately determined by the quality of its fundamentals. According to the latest data from the National Bureau of Statistics, in the first eight months of this year, profits in the electronics industry grew 1.1 times year-on-year, contributing 62.0% to the profit growth of all industrial enterprises above designated size, serving as an important support for the relatively rapid profit growth of industrial enterprises above designated size.

Among them, emerging scenarios such as new energy vehicles, the Internet of Things, and computing power centers drove increased demand for chips. Profits in the optoelectronic device manufacturing and semiconductor discrete device manufacturing industries, which are related to these, grew 72.0% and 51.8% respectively. The rapid development of the electronic basic materials sector drove profits in electronic special materials manufacturing and electronic circuit manufacturing up 2.3 times and 49.1% respectively.

Driven by market demand, technology companies have entered the fast lane of earnings realization. Taking the STAR Market as a representative example, companies on the board achieved total operating revenue of 1.01 trillion yuan and net profit of 144.887 billion yuan in the first half of the year, up 38.6% and 437.6% year-on-year respectively. Net profit exceeded the full-year level of the previous year, further demonstrating the board's role as the core main front for developing new quality productive forces.

Among them, 36 growth-tier enterprises continued to burst with innovation vitality, with operating quality and efficiency steadily improving. Revenue grew 29.1% year-on-year, and losses narrowed sharply by 62.3%, as the new force in science and technology accelerated its growth.

The next-generation information technology industry showed particularly notable performance growth, with overall revenue and net profit increasing 73.1% and 896.1% year-on-year respectively. The integrated circuit industry, driven by multiple factors including the AI computing power explosion and accelerating domestic substitution, achieved revenue of 379.228 billion yuan, up 106.1% year-on-year, and net profit of 114.258 billion yuan, up 967.2% year-on-year.

Innovation Achievements Keep Emerging

Long-term earnings growth requires a steady stream of R&D support. In the first half of the year, R&D investment by实体 companies on the Shanghai Stock Exchange totaled over 475 billion yuan, up about 6.5% year-on-year. R&D investment by STAR Market companies totaled 104.4 billion yuan, up 14.6% year-on-year, with the median R&D intensity reaching 12.6%, continuing to remain at a high level.

Capital expenditure in emerging industries remained at a relatively high level, with proactive investment directed toward production line upgrades, capacity expansion, and process equipment procurement. In the first half of the year, cash flow paid for the purchase and construction of long-term assets reached 406.6 billion yuan, up 4.4% year-on-year.

From the latest developments, a batch of R&D achievements from the STAR Market are emerging in succession. Changxin Technology recently announced mass production of its fifth-generation DRAM technology platform (G5) and simultaneously exhibited a high-capacity LPDDR5X product built on this platform. According to reports, the G5 platform achieved multiple industry-leading technological breakthroughs in key process dimensions. Leveraging an innovative quadruple patterning technology, it reduced the active area half-pitch of the memory array to 11.95 nanometers, approaching the most advanced memory mass production platform processes globally.

Moore Threads' latest-generation "Huagang" architecture achieved major breakthroughs at the underlying microarchitecture level, increasing computing density by 50% and improving computing energy efficiency by 10 times, while natively enhancing hardware-level acceleration support for advanced low-precision mixed computing formats such as FP8/FP4.

Montage Technology also recently announced that its DDR5 fifth-generation register clock driver chip (RCD05) has successfully achieved mass production. This product targets high-performance DDR5 RDIMM memory modules, aiming to meet the growing demand from data centers, AI servers, and other applications for high-bandwidth, high-reliability memory systems.

No Shortage of Liquidity in the Market

Regarding the recent decline in trading volume that has drawn market attention, experts also stated, "The market doesn't lack liquidity; what it lacks more is confidence."

Facing rising expectations for external rate hikes, China has consistently adhered to an "independent" fiscal and monetary policy. The People's Bank of China proposed at its third-quarter 2026 meeting that it will continue to implement a moderately loose monetary policy, intensify counter-cyclical adjustment, maintain ample liquidity, and safeguard the stable operation of financial markets.

Data shows that at the end of August, broad money (M2) grew 7.5% year-on-year, and the stock of social financing grew 7.2% year-on-year. In August, the weighted average interbank lending rate and the weighted average pledged repo rate were 1.38% and 1.4% respectively, both at historical lows.

In addition, China's strong foreign exchange reserves also provide a solid guarantee for coping with external disruptions. As of the end of August 2026, foreign exchange reserves reached 3,438.3 billion U.S. dollars, ranking first globally for a long time.

The ecosystem of "long-term money for long-term investment" continues to be strengthened. Previously, Li Chao, Vice Chairman of the China Securities Regulatory Commission, pointed out at a State Council Information Office press conference on the "15th Five-Year Plan" that with the joint efforts of all parties, investment-side reform has achieved major breakthroughs, and the endogenous forces promoting the steady development of the market have been continuously strengthened.

Since the beginning of this year, social security funds, annuities, insurance, and other medium- and long-term funds have made net purchases of A-shares exceeding 600 billion yuan, and their holdings of A-share tradable market value continued to grow by 12.5% compared to the end of 2025.

It is understood that since the beginning of this year, the Shanghai Stock Exchange has promoted the listing of 8 STAR Market broad-based ETFs and 19 STAR Market industry-themed ETFs, covering sub-themes such as STAR chips, STAR chip design, and STAR artificial intelligence, further enriching the STAR Market investment "toolbox."

As of September 24, 2026, the Shanghai Stock Exchange has listed a total of 150 STAR Market ETFs, with an overall scale of approximately 389.8 billion yuan, continuously and effectively guiding social capital to gather in the field of technological innovation.

Institutions Actively Bullish on the Market

As for whether investors should cautiously hold cash through the holiday, many institutions suggest that investors should be more firmly confident.

Xu Jinfeng, Chief Strategy Analyst at Caitong Securities, believes that current downside risks have further diminished, and holding stocks through the National Day holiday may be more worthwhile. Historically, China-U.S. meetings often front-run positive trading, and this round's expected trading has been limited. If new positive catalysts emerge, the rally is likely to continue upward.

Qiu Xiang, Chief A-Share Strategy Analyst at CITIC Securities, also stated that in an environment where industry prosperity trends have not yet cooled, and only the long-term narrative ceiling has been touched and priced to a certain extent, the probability of a sharp correction ending the market directly is very low. A second offensive and even new highs are likely to occur.

Foreign institutions are also expressing optimism about the market through concrete actions. Wind data shows that as of September 27, 640 foreign institutions have participated in research on A-share listed companies this year, with a total of 5,949 research visits. The intensive research schedules of foreign institutions reflect international capital's recognition of China's economic resilience, industrial upgrading results, and technological innovation capabilities.

The certainty, scarcity, and global allocation value of Chinese assets are increasingly evident, and their long-term attractiveness is growing.

Previously, a report released by the Norwegian Government Pension Fund showed that as of June 30, 2026, the fund held 658 Chinese stocks with a total position value exceeding 47 billion U.S. dollars (approximately 340 billion yuan). Wind statistics show that as of the end of the second quarter this year, the Abu Dhabi Investment Authority held 65 A-share stocks with a position value of 24.992 billion yuan.

Public fund views are equally positive. China AMC stated that corporate earnings continue to grow at a high rate, fundamentals are solidly supported, and the market has upward momentum. It is currently in a key window of "earnings verification," and A-share earnings are expected to continue recovering in the fourth quarter. Currently, the CSI All Share Index trades at 20.3 times earnings, at the 69.6th percentile historically, with a price-to-book ratio of 1.75 times, having fallen significantly from the first-half high. Non-fundamental concerns have been largely priced in, and the probability of valuation repair is relatively high.

Huatai-PineBridge Fund also stated that the resilience, vitality, and stability of China's capital market do not depend on any single industry or individual listed company, but rather stem from systematic support jointly formed by economic fundamentals, financing structure, and policy support. External disruptions are generally controllable, and domestic policies maintain independence and resolve. China's monetary policy adheres to "taking itself as the main focus," the macro-prudential toolbox continues to be enriched, and the ability to withstand external shocks has been significantly enhanced.