On the first trading day after the National Day holiday, the market fluctuated and weakened, with all three major indices closing lower. The Shanghai Composite Index fell 0.79% to 3,811.90 points, the Shenzhen Component Index dropped 2.07% to 12,620.90 points, and the ChiNext Index declined 3.15% to 3,036.66 points; Wind All A fell 1.61%, the STAR Composite Index dropped 4.55%, the Beijing Stock Exchange 50 fell 2.65%, the CSI 300 declined 1.09%, and the STAR 50 dropped 4.82%. Total market turnover reached 1.69 trillion yuan. Market style diverged significantly, with more than 3,500 individual stocks declining across the market.
Market review
Looking at today's decline structure, technology growth became the absolute main force of the sell-off, driven by the resonance of three factors: overseas liquidity expectations, industrial news disturbances, and internal capital rebalancing. First, the Federal Reserve's September meeting minutes released overnight showed that all 19 officials supported the September rate hike, with most participants believing another hike before year-end might be appropriate, and specifically mentioned that AI infrastructure construction could bring upward pressure on inflation. The hawkish signals directly suppressed global high-valuation growth stocks and transmitted negative sentiment to A-shares. Second, at the industry level, a Morgan Stanley research report dated October 1 judged that the U.S. FCC's restrictions on Chinese-made optical modules would most likely take effect at the 3.2T generation, making the optical chip sector the hardest-hit area in today's sell-off. Third, the previous technology mainline had risen enormously with crowded trading, creating significant profit-taking pressure; the STAR 50 Index hit a new low since April 29 during today's session, having corrected more than 35% from its July high, and capital accelerated its rotation from high-level tech stocks toward lower-level directions such as banking, oil and gas, and batteries, further amplifying selling pressure. It should be noted that the central bank conducted 1.2 trillion yuan in outright reverse repurchase operations today, clearly demonstrating a liquidity-friendly stance. We believe this round of adjustment is more a correction of the trading structure in high-level sectors rather than a reversal of industry trends.
Allocation recommendations
Looking ahead, under the Fed's hawkish stance, rate hike expectations before year-end still exist, and the constraint of the overseas high-rate environment on high-valuation growth sectors will be difficult to eliminate immediately. The technology direction may still need time to digest crowding and profit-taking in the short term. However, the long-term certainty of industry trends in AI computing power and semiconductors has not changed. October enters the intensive disclosure period for third-quarter earnings, and earnings realization capability will become the core anchor for tech stock pricing, with segment leaders that have genuine profit support expected to stabilize first. In terms of allocation, it is recommended to maintain a balanced approach: on one hand, pay attention to opportunities in technology growth that have been oversold after adjustment with high earnings certainty; on the other hand, consider the defensive value of directions with fundamental support such as banking and resource commodities.