On August 19, the A-share market experienced a notably severe decline, with the Shanghai Composite Index losing the 3,900-point mark once again. The ChiNext Index and the STAR 50 Index both suffered heavy losses, while total market turnover reached approximately 2.53 trillion yuan, up about 110 billion yuan from the previous trading day. This volume-driven drop indicates substantial capital outflows as investors actively sold off positions. Unitree Robotics stood out in the humanoid robot sector, but semiconductor, CPO, storage chip, and humanoid robot technology growth areas led the decline. In contrast, low-valuation defensive sectors such as coal, banking, and oil and gas rallied, creating a clear "high-low switch" in market structure.

Many investors expressed confusion over such a violent correction after a half-month rally was erased in a single day. Following the market close, several public fund companies issued statements, analyzing the situation from perspectives including overseas transmission effects, internal trading structure, and industry prosperity.

Why the Fall Back to 3,900 Points? Overseas Shocks Are the Main Driver

Fund companies largely attributed the sharp adjustment to overseas factors, identifying the dual impact of surging global long-term yields and the sharp decline in U.S. tech stocks as the primary cause. Internal profit-taking demand from previously popular sectors and trapped capital pressures amplified the extent of the correction.

Firstly, a global sell-off in long-term bonds triggered fears of valuation compression. Gold Eagle Fund pointed out that the U.S. 30-year Treasury yield hit its highest level since 2007, while the 10-year yield broke above 4.7%, approaching yearly highs. This pushed the global asset pricing benchmark steadily upward. Notably, this bond market turmoil is a global structural phenomenon, with yields in economies including France, Germany, the UK, and Japan all climbing to elevated levels.

"The market's core anomalies are currently concentrated in U.S. Treasuries and gold. Despite three consecutive positive data points from U.S. CPI, PPI, and retail sales, Treasury yields remain stubbornly high. The fundamental reason is that the source of inflationary pressure has shifted from consumption to investment," stated Hwabao Fund. The massive financing and construction of AI infrastructure, combined with a surge in long-term bond supply, create dual pressure keeping bond yields elevated.

Secondly, the sharp drop in U.S. tech stocks and doubts over the AI narrative played a role. Overnight, the Philadelphia Semiconductor Index fell about 5%, with previously strong sectors like storage and optical communications leading losses. Panic quickly spread to Asian markets. Great Wall Fund believes this reflects the market beginning to price in the debt financing risks behind massive AI capital expenditure. CITIC Prudential Fund further noted that since August, U.S. investment-grade bond issuance has hit record highs for the same month for three consecutive months. As AI infrastructure construction encourages corporate borrowing, large data center projects must offer higher yields to secure sufficient funding in the bond market. J.P. Morgan Asset Management also emphasized that rising long-term rates directly compress valuations for high-duration technology growth assets.

Thirdly, disappointing earnings from overseas AI companies have deepened concerns. AI firm Anthropic's annualized revenue through the end of July was approximately $65 billion, below market expectations of $78 billion to $80 billion. This has raised worries about slowing revenue growth, potentially leading to reduced capital expenditure forecasts. Qianhai Open Source Fund noted that OpenAI's second-quarter revenue growth was only 18%, fueling concerns about downstream demand for AI terminals.

Additionally, concentrated trading positions within A-share tech sectors exacerbated the sell-off. Invesco Great Wall Fund stated that following a short-term rebound, some funds in previously popular tech growth sectors took profits or rotated into low-valuation defensive sectors, intensifying selling pressure in high-position areas. J.P. Morgan Asset Management also observed that after a deep correction over the past month, sectors like storage experienced concentrated trapped-capital selling after rebounding, becoming a core trigger for the market's accelerated decline.

"The market remains in a rebalancing process. Short-term rapid rebounds in tech growth sectors naturally lead to some adjustment demand. This correction is a concentrated release of sentiment from external liquidity shocks and internal profit-taking needs," said Yang Chao, fund manager at Jin Xin Fund.

Tech Industry Trend Remains Intact, But Fund Managers Differ on Timing

Despite heightened short-term market volatility, most public fund institutions believe the AI industry trend has not ended. They view this adjustment as a "strong pullback" rather than a trend reversal. However, there are differences in judgment regarding the timing of tech sector movements.

Invesco Great Wall Fund stated that the tech industry trend has not reversed and patience is still required. In the short term, the market is entering the mid-year report disclosure window, where positive earnings surprises from leading companies could be observed for market feedback. In the medium term, driven by the continuation of the "moderately loose" policy tone and upcoming U.S. midterm elections, A-share risk appetite is expected to see a favorable window for renewed bullish positioning by the end of Q3.

Wu Chunlin, fund manager of the China Southern China Dream Flexible Allocation Fund, also expressed confidence in the AI direction. While acknowledging current disagreements over AI growth slope, he believes the trajectory is upward. He noted there are numerous mispriced opportunities with reasonable valuations and continuously strengthening fundamentals. Many segments possess strong endogenous growth drivers, including domestic substitution, capacity ramp-up, and new product validation, which can deliver solid growth even amid AI slope fluctuations.

Surveyed fund companies believe the market is more likely to experience volatile upward movement with limited downside. J.P. Morgan Asset Management expects the market's upward slope to slow noticeably, potentially forming a pattern of volatile ascension. As the rebound enters "deeper waters," market sensitivity to external disturbances and changes in position structure has increased significantly. Strategically, confidence in the A-share medium-term upward trend can be maintained, but tactically, greater attention to rhythm control and structural selection is needed.

Guotai Fund also favors opportunities from market volatility and rebounds. The recent market pullback occurred despite the tech fundamentals trend continuing to materialize. Over the past two weeks, the overseas earnings season has intensively verified accelerating computing power prosperity, further confirming AI industry health. The recent decline primarily stems from technical factors and positioning issues, not a reversal in fundamentals.

Qianhai Open Source Fund pointed out that from a long-term perspective, with no global rate hike cycle or economic recession currently visible, the likelihood of the market cycle ending is low. The AI industry trend is far from being disproven, and the possibility of the global AI mainline ending is also unlikely. Considering potential policy support from future U.S.-China meetings and during Trump's midterm election period, downward pressure is limited.

Great Wall Fund believes the correction represents normal volatility in the mid-to-late stage of a bull market. With no substantial deterioration in numerator-side factors like AI demand and mid-year report prosperity, this is closer to a "strong pullback" than a trend reversal. They will continue to track the sustainability of global AI capital expenditure, U.S. Treasury yields, overseas deleveraging progress, and mid-year earnings delivery.

How to Allocate? Balance Tech and Dividend Plays, Focus on Earnings Delivery

In terms of allocation advice, most public fund institutions lean toward maintaining a balanced strategy: on one hand, selectively buying oversold tech directions with prosperity support; on the other, allocating to dividend value sectors as defense while awaiting new catalysts.

In the tech space, funds recommend focusing on domestic computing power, semiconductor equipment, and other self-sufficiency themes. Yang Chao believes the adjustment provides a rare re-allocation opportunity for quality growth assets, with tech directions focusing on domestic AI computing power, semiconductor equipment and materials, and other domestic substitution areas.

CITIC Prudential Fund provides support from industry data. The company stated that starting in the second half of 2026, the global semiconductor industry may enter a new round of price increases. Multiple chip manufacturers, including ADI and BYD Semiconductor, have issued price adjustment announcements. STMicroelectronics' third price increase this year reflects ongoing cost pressures in the industry chain. Continuous iteration in chip manufacturing processes is expected to further expand the growth ceiling for upstream equipment. CMP has been upgraded to the fourth core process, and the listing of leading domestic storage companies may also bring new opportunities for the domestic CMP industry chain.

Guotai Fund recommends selecting leaders with strong demand certainty in the AI hardware mainline. For non-tech directions, it suggests tilting toward lithium batteries, innovative drugs, non-bank financials, and the export chain.

In terms of dividend value, defensive allocation value is prominent. During market rebalancing, dividend sectors like banking, coal, and power have attracted attention from multiple institutions. Hwabao Fund suggests focusing on short-term themes including dividends, precious metals, and domestic chains. In the medium-to-long term, it recommends focusing on strategic resources, AI, and new energy.

Gold Eagle Fund noted that funds are currently shifting from a single mainline to rotation across multiple prosperity directions. It recommends paying attention to resource-constrained areas such as rare earths and non-ferrous metals, while also focusing on defensive sectors with relatively stable profits like coal and chemicals, as well as non-bank financial sectors with improving fundamentals and lower position pressure.

Behind the balanced allocation advice is the fact that August's main market theme has yet to be clearly defined. Qianhai Open Source Fund suggests leaning slightly toward offense currently, but expects direction rotation. The tech mainline remains clear long-term, with significantly improved cost-effectiveness compared to before. Since hardware sectors have undergone substantial adjustments, market confidence is not what it once was. Specifically, attention can be paid to less crowded directions within the tech sector.