Today, A-shares fluctuated throughout the day. The Shanghai Composite Index edged up 0.18% to 3,946.74, while the Shenzhen Component Index remained flat. The ChiNext Index rose 0.25%, whereas the STAR Composite Index fell 1.99%. Total turnover in Shanghai and Shenzhen markets shrank by 200.2 billion yuan from the previous session to 1.73 trillion yuan. Sector-wise, gold-related sectors such as gold stocks, non-ferrous metals, and mining led gains, while high-dividend sectors held steady. High-beta sectors like media, gaming, and software retreated. Risk appetite appeared neutral-to-weak, with over 4,100 stocks declining. Small caps underperformed large caps, growth lagged value, and the STAR-ChiNext divergence persisted. Overall, market sentiment leaned neutral-weak.
A-shares continue consolidating. We believe the current pullback doesn’t signal the end of the bull run, given persistent excess liquidity and ongoing deposit migration. Long-term optimism remains for tech, anti-involution sectors (e.g., solar, lithium), and export-oriented manufacturing. However, without fresh catalysts, consolidation may persist. We recommend: 1) balancing core holdings with defensive plays; and 2) awaiting improved income expectations.
Sector allocation should reflect China’s economic transition. Key opportunities lie in tech (AI chain), anti-involution (upstream resources like solar/lithium), and export manufacturing. Relevant ETFs include Communication ETF (515880), Semiconductor ETF (512760), Solar Energy 50 ETF (159864), and Coal ETF (515220). Without fiscal stimulus, a rotation to low-priced consumer stocks seems unlikely. Given tech’s recent volatility, investors may also consider high-dividend ETFs like HK Dividend (159331), SOE Dividend (510720), and Cash Flow ETF (159399).
Income expectations are critical for the bull market’s next phase. CICC notes a growing divergence between A-shares’ "financial heat" and "economic chill," with valuations driving stocks despite weak consumption. The 15th Five-Year Plan’s emphasis on boosting household spending power could improve macro sentiment if reinforced by income, social security, or debt-resolution measures.
Bond markets also consolidated, with the 10-Year Treasury ETF (511260) dipping 0.04% and 30-year futures down 0.41%. Despite weak credit expansion, the PBOC’s measured easing has kept rates rangebound. With the central bank fine-tuning liquidity, we expect continued volatility. Strategically, bonds remain a hedge against equity risks, with the 10-Year Treasury ETF (511260) serving as a portfolio anchor.
Lithium stocks rallied as carbonate futures surged 5% past 100,000 yuan/ton—a first since June 2024. Tight supply and strong demand from energy storage support prices, though 2025 demand debates linger. Mining ETF (561330) and Nonferrous 60 ETF (159881) offer exposure. Copper/aluminum may also shine amid AI/power demand and supply constraints.
Gold Equity ETF (517400) jumped 4.55% as spot gold rebounded to $4,100/oz. Central bank buying (220 tons globally in Q3 2025; China’s 12th straight monthly addition) underscores gold’s safe-haven appeal. CICC sees room for gold to test $5,000/oz amid Fed easing and de-dollarization. Gold Fund ETF (518800) tracks physical prices, while Gold Equity ETF (517400) offers leveraged exposure via the CSI HK Gold Stock Index.
U.S. political noise around the Fed chair succession (Trump’s comments on Powell) and upcoming FOMC minutes/NFP data may sway rate expectations. CFTC will resume weekly COT reports starting Thursday.
Risk Disclosure: ETFs carry market risks. Past performance doesn’t guarantee future returns. Investors should assess risk tolerance and consult professionals before investing.