On October 21, the Shanghai Composite Index experienced a day of volatility and adjustment, with the ChiNext Index surging then falling back, dropping over 2% at one point near the close. By the end of trading, the Shanghai Composite fell 0.6%, the Shenzhen Component Index fell 0.82%, and the ChiNext Index dropped 1.62%. A total of 1,981 stocks rose while 3,364 declined.

Data element concept stocks bucked the trend, with companies like Sanwei Tiandi and Nanwei Software hitting the daily limit. On the downside, the battery industry chain collectively slumped, as CATL (300750) plunged nearly 12% for the day, marking its largest single-day drop in history. Shanghai Xiba also hit the limit down.

Why the Market Fell

Overseas markets such as those in Japan and South Korea, along with US stock futures, continued to rise today, so the decline in the domestic market can only be attributed to internal factors. Part of the reason is that the drop in CATL dragged down the index.

Why did CATL fall so much? On the news front, its third-quarter revenue was 165.221 billion yuan, up 58.58% year-over-year; net profit attributable to shareholders was 21.246 billion yuan, up 14.54% year-over-year but down quarter-over-quarter. This quarterly net profit was below widespread market expectations. Previously, JPMorgan comprehensively lowered profit forecasts for the battery industry chain. The core judgment is that the fundamental contradiction in this round of adjustment is not weakening battery demand, but the accelerated deterioration of industry profitability and the forced redistribution of the profit pool.

Analysts pointed out that the current adjustment in the battery sector is essentially a "struggle for profit distribution rights" rather than "concerns about the endgame of demand." JPMorgan advised investors to abandon linear extrapolation of a "full-scale price war" and focus on "who has the ability to expand relative advantages when the profit pool shrinks." CATL-A is the only target that combines "short-term profit resilience + medium-term technological options (sodium batteries/battery swapping) + long-term financial barriers," with short-term stock price disturbances from sentiment and tax policies providing a window for bargain allocation; while second-tier battery and material stocks should be approached with caution until cash flow inflection points are clear. The next round of excess returns in the industry will come from precise pricing of the "profit rebalancing" process, rather than simple extrapolation of installation volume figures.

Late-Session Developments

However, there was good news near the close today. Just as the index continued to fall, mysterious funds stepped in to turn the tide. Several broad-based ETFs saw significant volume increases in the final minutes. The ChiNext ETF E Fund (159915) exceeded 10 billion yuan in turnover, the CSI 300 ETF Huatai-PineBridge (510300) traded over 3 billion yuan in the last half hour, and the CSI 300 ETF Harvest (159919) and SSE 50 ETF ChinaAMC (510050) each traded over 1 billion yuan in the final half hour.