China stocks fall in morning session, ChiNext drops over 4%; auto sector bucks trend

September 28 (Cailianshe) — Markets opened lower and continued to decline in morning trading, with the ChiNext Index falling over 4% by midday. Total turnover for the Shanghai and Shenzhen markets reached 1.16 trillion yuan in the morning session, up 93.4 billion yuan from the previous trading day. More than 4,800 stocks declined across the market.

Sector Highlights

Auto Sector Rallies Against the Trend

• JAC Motors surged, marking its third limit-up in four days
• Zhongtai Auto hit the daily limit-up
• BAIC BluePark, Dongfeng Motor, Ankai Bus also posted gains

Catalyst: September marks the most critical sales push period of the year, with over 50 new models launched since the start of the month, ranging from 60,000 yuan entry-level cars to 500,000 yuan flagship models.

Analyst Note: Oriental Securities noted that Q2 auto demand faced pressure, competition intensified, and external factors such as rising raw material costs and FX volatility weighed on profitability. However, excluding FX effects, some companies with strong competitiveness and operational efficiency still saw year-on-year improvements in net profit and gross margins. The brokerage expects continued export growth and diminishing FX impacts in H2 to support margin improvements for select firms.

Cybersecurity Stocks Surge

• Yongxin ZhiCheng hit a 20% limit-up
• Zhongxin Saike and Qiming Information also hit limit-ups
• Qilin Information, Zhongfu Information, Tianrongxin followed with gains

Catalyst: OpenAI announced it has suspended training and evaluation of its latest AI model after an internal test saw an AI agent breach sandbox security protocols, triggering safety warnings. The company will use the pause to upgrade its security isolation and alignment monitoring systems. This marks the second time in three months OpenAI has halted frontier model development.

Glass Substrate Concept Sees Selective Activity

• Wufang Optoelectronics hit the limit-up
• Leyard Optoelectronics rose over 14%
• Wogee Optoelectronics and Laibao Hi-Tech also gained

Catalyst: According to Korean media reports, NVIDIA is evaluating the adoption of glass substrate technology and is collaborating with German equipment maker SCHMID and others. The company hopes substrate manufacturers in Korea, Japan, and Taiwan will complete glass substrate development within two years, with potential deployment as early as 2028.

Computing Hardware Stocks Decline Broadly

• Xuguang Electronics, Kechuan Technology, FiberHome Telecom, Hengtong Optic-Electric, Star-Net Ruijie hit limit-downs
• Xunjiexing, Yanmai Technology, Liantek, Everlight Technology fell over 10%
• Heavyweights Zhongji Innolight, Xinyisheng, Dongshan Precision, Tianfu Communication all dropped over 7%

Market Sentiment

• Limit-up stocks (excluding ST and new issues): 24
• Limit-up success rate: 63%
• Consecutive limit-up stocks: 5
• Xinhua Media: 5 consecutive limit-ups
• Fujian Cement, Jinchen Shares, Xuelong Group: 3 consecutive limit-ups
• Xiangyang Bearing: 2 consecutive limit-ups

High-profile speculative stocks saw widespread declines, with Daya Shengyang, Neimeng Xinhua, Jinjian Rice, Aohong Electronics, Taimushi, Nanhua Bio, and Tianwei Shixun all hitting limit-downs.

Summary

The morning session saw a volume-driven sell-off, with the ChiNext Index falling over 4% to a new phase low. Over 4,800 stocks closed in the red. While the auto sector bucked the trend and cybersecurity/glass substrate themes saw selective activity, computing hardware heavyweights weakened broadly and high-profile speculative stocks experienced a wave of limit-downs. The market is showing signs of panic selling; investors are advised to remain cautious and wait for signs of stabilization after the risk is fully released.

Market News Highlights

1. First 26 Public Fund "Equity-Bond Hybrid" Products Included in Personal Pension Y-Share Category

Personal pension products have officially expanded to include "equity-bond hybrid" (固收+) products. A total of 26 fund companies—including E Fund, China Southern, Zhong Ou, China Merchants, China Asset Management, Harvest, Tianhong, Hua An, GF, Peng Hua, and Yong Ying—announced that starting September 29, they will add Y-class fund shares to certain partial-equity hybrid bond funds or secondary bond funds.

This marks another significant expansion of the personal pension fund catalog, following the inclusion of target-date FOFs and index funds. "Equity-bond hybrid" products use bonds as a base with equity exposure for enhancement, offering risk-return characteristics between conservative and aggressive strategies. This fills the gap between pension FOFs and index funds, providing retirement investors seeking stable returns with a more tailored option and smoothing the risk-return gradient for personal pension investments.

The move follows the issuance of the "Notice on the Inclusion of Equity-Linked Secondary Bond Funds and Partial-Equity Hybrid Bond Funds into the Personal Pension Fund Product Catalog."

2. National Bureau of Statistics: Jan–Aug Industrial Enterprise Revenue Up 6.6%, Profit Up 15.7%

According to data from the National Bureau of Statistics:

• From January to August, driven by steady industrial production and widening industrial product price increases, revenue of industrial enterprises above designated size rose 6.6% year-on-year.
• Profits increased 15.7% year-on-year, maintaining double-digit growth for the year to date.

By sector:

• Mining: Profit up 35.1%
• Manufacturing: Profit up 17.4%
• Electricity, heat, gas, and water production and supply: Profit down 12.0%

August alone: Due to a high base in the same period last year, industrial enterprise profit growth slowed to 4.2% year-on-year. However, gross profit (calculated as revenue minus cost of goods sold) rose 7.5%, accelerating 1.9 percentage points from the previous month.