On November 11, Shenwan Hongyuan Securities held its 2027 Capital Markets Investment Annual Meeting in Shanghai, where Shenwan Hongyuan Group Co.,Ltd. (ASX: 000166) senior strategy analyst Wei Chunze delivered a presentation titled "Why Has Market Volatility Increased," covering a review of A-share capital flows in 2026 and an outlook for 2027.

"Siphoning and convergence" was precisely the core reason behind the sustained strength of technology leaders and the divergence in market style during the second quarter of 2026. After small and medium-sized investors combined with sector-focused products and internet channels, trading momentum was further amplified. Other funds, under the dominance of a single style, chose to follow industry trends, pushing technology trading crowding to historic highs.

High volatility during the upward phase made high volatility equally unavoidable during the downward phase. In the third quarter of 2026, crowding digestion coexisted with lingering sector enthusiasm. In the early stage of the July downturn, the technology rally was mainly characterized by crowding digestion, with marginal trading capital shifting toward absolute-return funds and margin financing funds.

Outlook for A-share market capital supply and demand in 2027: There is still room to open new tracks on the AI application side, as the AI industry continues to advance; the space for household asset allocation to migrate toward equities has not yet been effectively utilized, and a "second-stage rally" can still be expected to take shape in 2027.

Before the "second-stage rally" begins, A-share market capital will remain in a broad stock-game equilibrium, with sector-focused funds and allocation-type funds struggling to form a concerted force on technology leaders, and trading-oriented capital regaining relative dominance. Once the "second-stage rally" is confirmed, the market is expected to return to an incremental game.