China A-shares plunge as pre-holiday effect and US yields trigger broad sell-off
Chinese A-share markets experienced sharp declines in late September, driven by a pre-National Day holiday cash-out effect and rising US Treasury yields. On September 23, trading volume shrank 370 billion yuan to 1.76 trillion, with over 3,500 stocks falling. By September 28, the Shanghai Composite and ChiNext hit new lows, with 4,803 stocks declining. High-valuation tech sectors were hit hardest, while analysts cited global liquidity tightening and holiday risk aversion as key factors.
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China A-Share Indices Close Lower; ChiNext Drops Over 4.5%, Chip Stocks Under Pressure
China's A-share markets closed broadly lower on the day, with the Shanghai Composite Index falling 1.67%, the Shenzhen Component Index dropping 3.44%, and the ChiNext Index plunging 4.53%. Total turnover on the Shanghai and Shenzhen exchanges reached approximately 1.70 trillion yuan, up about 49.44 billion yuan from the previous session. Declining stocks vastly outnumbered gainers, with over 4,554 stocks falling versus 898 rising. Sector-wise, advanced packaging, semiconductors, communication equipment, and consumer electronics led the declines, while electric power, oil and gas extraction, and railway and highway sectors posted gains. In a market outlook, China Galaxy Securities noted that before the National Day holiday, the market is in a phase of competition between key window catalysts and short-term trading constraints, leading to rapid sector rotation. It stated that the results of Sino-US economic and trade consultations and the agreement on eight-point consensus provide important support for pre-holiday risk appetite, but capital flows may still be constrained by cross-long-holiday risk premiums and end-of-third-quarter institutional assessment constraints. Looking ahead to after the holiday, the brokerage expects that the factors suppressing trading will ease, and market expectations may gradually recover, but overseas disturbances remain numerous, making the market more inclined toward structural rotation.
Read sourceU.S. Treasury yields rise and holiday effect drag China's Shanghai, ChiNext indices to new lows
On September 28, China's A-share market experienced a sharp decline, with the Shanghai Composite Index and the ChiNext Index both hitting new lows for the period. The downturn was attributed to rising U.S. Treasury yields, which lifted the global risk-free rate and dampened risk appetite, combined with China's pre-holiday 'long holiday effect' where investors tend to cash out. The sell-off was broad, with 4,803 stocks falling versus only 676 rising, and high-valuation growth sectors like CPO, optical communications, and PCB were hit hardest. Economist Pan Helin stated that the core trigger was the global liquidity tightening from central bank rate hikes and rising bond yields, which suggests further tightening ahead, amplified by the holiday effect. He forecasted that if overseas markets and the Middle East situation do not worsen during the National Day holiday, A-shares could rebound afterward; otherwise, they may need to wait for overseas risks to fully dissipate.
A-share trading volume shrinks 370 billion yuan, pre-holiday effect emerges as high-flying stocks plunge
Chinese A-share markets experienced a significant contraction on September 23, with total trading volume falling to 1.76 trillion yuan, a drop of 370.6 billion yuan from the previous session. The Shanghai Composite Index fell 0.39%, the Shenzhen Component Index dropped 0.64%, and the ChiNext Index declined 0.6%. Over 3,500 stocks declined. Analysts attribute the volume shrinkage to the 'pre-holiday effect' ahead of China's National Day holiday, noting that in four of the past five years, markets have seen volume contractions of 10-20% before the holiday. The current volume aligns with a roughly 10% contraction from the 20-day average. The liquidity squeeze caused high-profile speculative stocks to collapse, including newly-listed C Zhongsu which fell 34.53% after surging 683% the previous day. Multiple consecutive-limit-up stocks also hit their daily limits downward. Large-cap stocks requiring significant liquidity, such as Zhongji Innolight, saw trading volumes shrink sharply. Datong Securities forecasts that markets will remain 'theme-less' in the short term with frequent sector rotation, but the technology sector may re-emerge as the long-term main line. The article also notes that PCB stocks gained on news of BOE's investment plans and a cost-pass-through mechanism in the supply chain.
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China A-Share Trading Volume Shrinks 370 Billion Yuan as Holiday Effect Hits, High-Priced Stocks Plunge
On September 23, Chinese A-share markets experienced a broad decline with the Shanghai Composite Index falling 0.39%, the Shenzhen Component Index dropping 0.64%, and the ChiNext Index losing 0.6%. Total trading volume on the Shanghai and Shenzhen exchanges shrank sharply to 1.76 trillion yuan, a decrease of 370.6 billion yuan from the previous session, as the 'pre-holiday effect' took hold ahead of the National Day holiday. Over 3,500 stocks declined. High-profile speculative stocks saw sharp reversals, with newly-listed C-zhongsu plunging 34.53% after surging 683% the prior day. Multiple other high-priced stocks hit their daily downside limits. Large-cap stocks also saw significant volume reductions, with Zhongji Innolight's turnover falling to 13.68 billion yuan from 22.34 billion yuan. A research note from Datong Securities attributed the weakness to a 'consolidation period' in global AI capital expenditure, pre-holiday risk aversion, and a lack of new market catalysts, predicting continued sector rotation without a clear main theme in the short term. The article also noted that PCB and glass substrate sectors gained on specific corporate news, including BOE's announcement of over 80 billion yuan in R&D spending over five years.
A-Share Trading Volume Plunges 370 Billion Yuan as Pre-Holiday Effect Hits, High-Priced Stocks Dive
On September 23, Chinese A-share markets experienced a broad decline with the Shanghai Composite Index falling 0.39%, the Shenzhen Component Index down 0.64%, and the ChiNext Index dropping 0.6%. Total trading volume on the Shanghai and Shenzhen exchanges shrank sharply to 1.76 trillion yuan, a decrease of 370.6 billion yuan from the previous session, signaling the onset of the 'pre-holiday effect' ahead of the National Day holiday. Analysts at Datong Securities noted that while interest rate hike concerns have been digested, the global AI capital expenditure wave is in a temporary 'accumulation phase' with weak upward momentum. Combined with pre-holiday risk aversion, funds lack the strength to form an upward consensus, and the market is expected to maintain a 'no main line' characteristic with frequent sector rotation in the short term. High-profile speculative stocks saw sharp reversals, with newly-listed C Zhongsu plunging 34.53% after surging 683% the previous day. Large-cap stocks requiring liquidity also saw significant volume reductions. The article attributes the rotation pattern to active funds shifting from recently strong sectors to lagging tech themes like PCB and glass substrates, driven by news of BOE's planned massive R&D and procurement investments.
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