Currently, the market is in a stage of consolidation after overselling. From the perspective of the index, the low point has been gradually raised, and the policy bottom suggests downside risk may be limited; however, from the standpoint of current trading volume and chip distribution, conditions for a trending upward move are not yet in place.
We believe the current rebound is more of a repair than a reversal. The main reasons are: a trend reversal requires not only policy support but also a recovery in risk appetite and sufficient digestion of the previous chip structure. Trading volume and the nature of capital determine how far this repair can go.
The surge in volume was concentrated on two rebound days, with advancers dominating throughout and limit-down stocks almost disappearing, indicating that incremental capital is indeed willing to absorb at low levels. At present, the main absorbers are basically passive, instrument-type funds. Equity ETFs have maintained net inflows for multiple consecutive weeks, with single-day scale once hitting a new high for the year, and margin balances have rebounded simultaneously, while the willingness of active funds to chase highs has not yet been verified.
This distinction is crucial: the role of instrument-type funds is to provide support, and their buying rules are determined by share subscription/redemption and index compilation. Their marginal pricing power over prices is weak, and they do not constitute a judgment on earnings. Only when active funds continue to enter can the valuation repair potentially be pushed into a trend re-rating.
Therefore, next week may enter a verification period, but the verification points need to be reset: first, whether trading volume can remain in the high-volume range; second, whether the AI hardware chain can stabilize after the overseas sell-off; third, whether policy tools can translate into real incremental capital.
Current external uncertainties have somewhat diminished, but this is bearish for AI, and liquidity risks have not been fully released. The U.S. midterm election results have led the market to expect constrained fiscal expansion and a lower probability of foreign military action, rapidly clearing geopolitical premiums. Oil prices have fallen, suppressing inflation expectations, which in turn has driven long-end U.S. Treasury yields and the dollar weaker, benefiting gold and non-ferrous metals sectors.
The outcome of the Democrats sweeping both chambers also means increased resistance to AI regulation, antitrust, and data center energy consumption reviews, with land approval and construction cycles being lengthened, and capital expenditure space facing downward revision. Combined with market doubts about the match between tech giants' computing power investment and returns, this ultimately evolved into concentrated selling of overseas tech stocks that transmitted to the A-share hardware chain.
Monetary policy has also not turned accommodative. At the last Federal Reserve meeting, rates were held steady, but there was a dissenting vote in favor of a rate hike, and the economic assessment was upgraded, constituting a typical "hawkish" pause. A year-end rate hike may still be the baseline scenario.
Looking ahead, in the short term, the index will most likely be dominated by consolidation. In terms of direction, within the growth sector, orders, cash flow, and earnings delivery will serve as the dividing line. Directions with delivery capability and a good chip structure may still have room for repair after a pullback, but whether the rebound can continue depends on two conditions: trading volume and the AI chain stabilizing. In addition, the dividend sector may still possess "defensive" value.
In the medium term through year-end, the policy bottom provides downside support, while the earnings bottom and overseas valuation anchors limit upside space. The index is more likely to fluctuate within a range with a slowly rising center of gravity, rather than embarking on a one-sided trend.
Disclaimer: The information contained in this communication is derived from sources the company considers reliable and from the personal judgment of researchers, but the company does not provide direct or implied statements or guarantees regarding its accuracy or completeness. This communication is not a complete statement or summary of the relevant securities or markets, and any opinions expressed may change without further notice. This communication should not be accepted as a substitute for the recipient's independent judgment or as a basis for investment decisions. The company or its related institutions, employees, or agents shall not be liable for any losses arising from any person's use of all or part of this content. Without prior written permission from Great Wall Fund Management Co., Ltd., no one may distribute, copy, reproduce, or publish this report or any part of it in any form, and no abridgment or modification of this communication contrary to its original meaning is permitted. The fund manager reminds that every citizen has the obligation and right to report money laundering crimes. Every citizen should strictly comply with relevant anti-money laundering laws and regulations. Investing requires caution.