After the optimistic sentiment accumulated during the National Day holiday was quickly digested in the surge and fall on October 8th, the A-share market immediately entered a period of intense volatility.

From the widespread decline of over 3700 stocks on October 8th, to the panic spread when the ChiNext Index briefly fell below the 3000 point mark in the early morning of October 9th, and to the "deep V" reversal created by the strong entry of funds through broad-based ETFs (exchange traded open-end index funds) in the afternoon, the market experienced a very extreme chip exchange in just 48 hours.

Loose chips?

On October 8th, the full day trading volume of A-shares reached 1.68 trillion yuan, a surge of over 240 billion yuan from the previous trading day. Under the huge transaction data, there is a severe loosening of chips in the technology weighted sector.

At the close of the day, the Shanghai Composite Index fell slightly, but the Shenzhen Component Index and the ChiNext Index fell 2.07% and 3.15% respectively. In the morning of October 9, panic spread further. The GEM index once fell below the psychological defense line of 3000 points, and more than 4300 stocks in the market were green.

As the dominant technology track in the early stage of the market, it has become the hardest hit area for this round of decline.

The two core directions of "light" and "chip" have suffered heavy setbacks, and hardware computing power links such as CPO (co packaged optics) concept, MLCC (multi-layer chip ceramic capacitors), PCB (printed circuit board) have experienced a limit down trend. Former popular brands such as Changguang Huaxin, Yuanjie Technology, and Dongshan Precision have successively closed down and hit the limit down.

This panic is not untraceable. At the market level, a rumor about 1.6T supporting optical chips facing price pressure quickly fermented within the industry chain, becoming the trigger that crushed short-term sentiment. Several listed companies, including Changguang Huaxin, Yongding Co., Ltd., and Shijia Photon, have stated that they have not received any news regarding the price reduction of optical chips. Shijia Photon, while denying rumors of price cuts, provided a more rational perspective, believing that this round of sector adjustments may have been disrupted by Morgan Stanley's research report on Federal Communications Commission (FCC) policies released on October 1st.

While the technology sector is under pressure, the market's risk aversion and pursuit of certainty have prompted funds to quickly flow back to dividend assets and strong cyclical sectors.

On October 8th, Bank of China, Industrial and Commercial Bank of China, and Hangzhou Bank hit a historic high amidst turbulence. Several institutional investment researchers analyzed to Economic Observer reporters that the high growth in the scale of the banking industry in the first half of the year and the improvement in the cost to income ratio were the main positive contributions. The year-on-year decline in net interest margin narrowed and the month on month stability rebounded, creating space for increasing dividends in the next two years. Against the backdrop of loosening of the technological mainline and a temporary decline in market risk appetite, the defensive value of high dividend assets has regained financial attention.

Thrust Appears

When the market fell into irrational panic selling on the morning of October 9th, another powerful upward push changed the originally one-sided downward parabolic trajectory.

As a cornerstone of A-shares and a core indicator of fund inflows and outflows for observation institutions, broad-based ETFs have shown different trading characteristics from the past.

From the perspective of the market, unlike the previous pattern of broad-based ETFs focusing on "sudden volume increases" in the last half hour of the market, the timing of the entry of large funds in this round has been significantly advanced. After the opening on October 9th, core broad-based ETFs continued to see large transactions.

As of the morning close of October 9th, the Huaxia Sci Tech Innovation 50 ETF had a trading volume of 6.835 billion yuan despite a decline of 3.58%, and the chip exchange on the exchange was very intense. In the afternoon, Huaxia Sci Tech Innovation 50 ETF continued to increase its trading volume, with a full day transaction volume of 10.766 billion yuan, an increase of 0.26%.

As of midday closing, the E Fund's ChiNext ETF had a trading volume of 5.336 billion yuan, closely following the Huaxia Sci Tech Innovation 50 ETF. The half day data has approached its full day trading volume of 5.548 billion yuan from the previous trading day. The final E Fund Growth Enterprise Market ETF closed with a turnover of 8.211 billion yuan.

What is even more remarkable is the synchronous volatility of small and medium-sized broad-based ETFs. The trading volume of the Southern CSI 1000 ETF reached 6.044 billion yuan throughout the day; The full day transaction volume of Huatai Bairui A500ETF and Nanfang A500ETF both exceeded 4 billion yuan.

This buying trend, which spread from blue chip stocks to small and medium-sized stocks, ultimately formed a strong bullish force in the afternoon. The main stock indexes quickly narrowed their decline after the afternoon opening, and collectively turned red after 14:00. A-shares left a highly iconic "deep V" long shadow line on the daily line, with a total trading volume of 1.9 trillion yuan in both markets for the day.

After the afternoon market confirmed the entry of "bottoming out funds", the direction of the funds' attack chose more topical and short-term catalytic sectors.

The film and television media sector may explode due to the release of China's first AI hyper realistic theatrical film "Sanxingdui: Future Memories", with Chinese online reaching a limit up of 20 centimeters; The agricultural sector has collectively risen in the World Meteorological Organization's warning of the formation of a super El Ni ñ o event, and the expectation of global crop supply contraction has brought the theme of food security back into view. In addition, with the disclosure of outstanding performance of non bank finance in the first half of the year, the securities sector also made efforts in the afternoon, combined with the positive news of the three major international rating agencies upgrading the ratings of Chinese securities firms, which together constitute an important factor in the afternoon reversal.

However, institutional investors have shown a more rigorous and cautious attitude towards the core thread that truly determines the mid-term direction of the market.

The research report of Huaxi Securities provides a clear response logic: "The allocation strategy adopts a dumbbell shaped combination: the technology direction is laid out in batches at low prices to grasp the main line of industrial prosperity; dividend assets are held for a long time to obtain stable dividend returns." It is worth noting that in the specific selection of the technology track, Huaxi Securities has set strict screening criteria and recommends prioritizing orders and cash flow redeemable targets, avoiding pure themes and overvalued varieties.

CITIC Securities believes that the transmission of "CapEx (capital expenditure) → ROIC (return on capital) → EPS (earnings per share)" in the computing power industry has been preliminarily verified, and the growth of capital expenditure will provide solid support for the subsequent technology market. But the next round of technology market is likely to start in the fourth quarter of 2026, and attention needs to be paid to the extension of infrastructure investment towards model capabilities and personal intelligent agent monetization.

For the technology sector that has recently experienced a dramatic shock, the investment research team of Southern Fund has maintained a relatively objective long-term perspective. Southern Fund believes that short-term fluctuations do not change the long-term trend of the AI industry, and liquidity shocks may bring opportunities for oversold targets with strong fundamentals; At the same time, it should be noted that active market trading has a positive impact on the securities sector, but in the short term, it is necessary to closely monitor whether the third quarter report can fulfill profit expectations.