No one expected it. The market had still been betting on the warmth brought by the consensus outcomes of the China-U.S. talks, and many people even positioned themselves early in technology growth stocks, waiting to ride a wave of gains after the holiday.

Instead, the market opened to a bucket of cold water. The main index turned downward, the Shenzhen Component Index and ChiNext Index fell to new lows since July, the communications sector dropped more than 6% during intraday trading, electronic components fell nearly 7%, CPO and optical communication concepts were collectively hammered, and more than 4,200 stocks across the entire market declined.

On the surface, it was an index plunge. But what truly shattered market sentiment also included a long string of share reduction announcements released in clusters before the holiday.

Tech Stocks Hit by Concentrated Selling

Start with the recent announcements that ignited sentiment. Suzhou Centec Communications Co., Ltd. (ASX: 688702), a domestic leader in switching chips, saw National Big Fund Phase I reduce 7.0747 million shares from June 8 to September 7, accounting for 1.73% of total share capital, at a transaction price range of 295.80 yuan to 454.90 yuan, cashing out approximately 2.584 billion yuan due to its own operational and management needs.

Aoshikang Technology (ASX: 688220), a core domestic baseband chip manufacturer, saw Alibaba Network reduce 1.86% from August 17 to September 10 at a price range of 82.91 yuan to 107.87 yuan, taking away 703 million yuan, and subsequently announced the early termination of the reduction plan due to its own arrangements.

Xingfu Electronics (ASX: 688545), an electronic-grade red phosphorus concept company, saw Big Fund Phase II complete its reduction on September 10 at an average price of 117.80 yuan, with a scale of approximately 424 million yuan, due to its own funding arrangements.

Beijing Huafeng Test & Control Technology Co., Ltd. (ASX: 688200), a domestic leader in semiconductor analog testing, saw controlling shareholder Xinhua Holdings reduce 1.10% through a inquiry-based transfer on September 11 at a transfer price of 328.94 yuan per share, involving approximately 727 million yuan, due to its own funding needs.

These four transactions combined amount to nearly 4.5 billion yuan. And that is just the cards shown face up. There is also a long string of hidden cards: Primarius Technologies (ASX: 688206) Jinqiu Investment and concert parties plan to reduce no more than 2%; Montage Technology (ASX: 688008) WLT plans to reduce no more than 0.19%; Yuanjie Technology (ASX: 688498) actual controller and concert parties plan to reduce no more than 0.2317%...

On the evening of September 27, Skyverse Technology (ASX: 688361), Heda Technology (ASX: 688296), and Hongyu Co., Ltd. (ASX: 002890) disclosed reduction plans on the same day, with Skyverse Technology and Heda Technology both seeing year-to-date gains of more than 100%.

Individually, each transaction appears "small in proportion" and "does not affect company operations." But when these companies are lined up together — Suzhou Centec Communications, Montage Technology, Yuanjie Technology, Xingfu Electronics, Primarius Technologies, Beijing Huafeng Test & Control Technology, Skyverse Technology — they are all among the stocks that have surged the most over the past year along the sci-tech chip and AI computing power chain.

Reductions themselves do not constitute a sufficient condition for a decline, but the price level at which reductions occur constitutes a signal. Suzhou Centec Communications' average reduction price was above 300 yuan, and Beijing Huafeng Test & Control Technology's inquiry-based transfer was at 328 yuan. In other words, the industrial capital and controlling shareholders who know these companies' value best chose to cash out at staged highs.

The Big Fund itself is the most iconic industrial capital in the semiconductor sector. According to incomplete statistics from listed company announcements, from 2026 to date, at least 18 A-share targets have issued reduction-related announcements (including pre-disclosure plans and completed reductions) from Big Fund Phase I and Phase II, involving high-position stocks such as National Silicon Industry Group (ASX: 688126), Hangzhou Changchuan Technology (ASX: 300604), Jiangsu Yoke Technology (ASX: 002409), and Biwin Storage Technology (ASX: 688525). Cashing out at highs is a preset path.

Coupled with simultaneous cash-outs by primary financial investors like Alibaba, the market immediately read a signal that "it is time to take profits." The originally crowded high-position growth stocks are extremely sensitive to sentiment in their valuations. Everyone was already betting on the boom cycle, and now shareholders are lining up to sell. Naturally, funds are unwilling to continue lifting the sedan chair.

This is not a question of judging whether companies are good or bad. This is a question of judging the odds.

Increased External Disturbances

Of course, blaming the crash entirely on reductions can easily lead to one-sidedness. What made sentiment even worse were the round after round of "small essays" about adjustments in overseas demand for optical modules. At the same time, external liquidity pressure, pre-holiday capital risk aversion, and institutional quarter-end position adjustments — several forces stacked together — formed this rare correction.

For A-share tech stocks, U.S. Treasuries are the hardest constraint on the denominator side. In late September, the 10-year U.S. Treasury yield briefly broke through 5.16%, and last Friday the 30-year broke through 5.5%, hitting a new high since 2004. What is more worth breaking down is the structure: from the beginning of the year to early September, the 10-year nominal yield rose 65 basis points, of which real yields contributed 53 basis points and inflation compensation contributed only 12 basis points. What the market is pricing is no longer short-term inflation panic, but a reassessment of long-term fiscal sustainability.

Tech stock valuations are essentially the discounting of future cash flows. When the discount rate rises, the forward portion shrinks. The CPO, optical communication, and computing hardware names leading today's decline are precisely the assets with the highest proportion of future cash flows and the valuations most dependent on narrative.

Interestingly, facing the same U.S. Treasury pressure, the U.S. Nasdaq recently hit new highs instead. The reason is not that the valuation logic has failed, but that the valuation premium and earnings certainty are different.

Second is the classic pre-holiday effect. The long holiday is not short, and during it there are uncertainties in overseas markets, geopolitics, and oil prices. For capital, holding positions through a long holiday is equivalent to bearing several extra days of uncontrollable risk premium. Many public funds, private funds, and short-term capital instinctively choose to reduce positions and hold cash through the holiday.

There is also the real constraint of institutional repositioning in the third quarter. As the quarter-end approaches, funds need to review holdings and rank performance. Some institutions will realize floating profits from the third quarter, reduce positions in tech stocks that rose enormously earlier, and move funds to position for fourth-quarter directions. Coupled with quantitative funds following the trend, once the decline starts, it forms negative feedback.

The most uncomfortable point in the market right now is that industrial capital is cashing out at highs, overseas rate increases are suppressing valuations, and pre-holiday capital risk aversion is stacking multiple negatives into the same time window. The positive factors the market previously expected are medium- to long-term variables and cannot immediately offset these short-term shocks.

Conclusion

There is no need for excessive panic. Distinguish two things: shareholder reductions are capital behavior and do not equal the end of the industrial cycle. The general direction of developing hard technology will not change. The long-term growth logic of sectors like semiconductors and optical communications has not disappeared; it is just that short-term valuations need to be digested.

What truly deserves vigilance is not the reduction announcements themselves, but a group of companies that tell stories while shareholders continuously cash out large amounts, yet whose performance cannot keep up with valuations.