On August 21, the A-share market opened lower in the morning, then fluctuated upward to close slightly in the green. The market continued its volume-contraction trend, with the three-market daily turnover falling below 2 trillion yuan. 2,505 stocks rose, with the communications and nonferrous metals sectors leading gains, while the pharmaceutical and consumer sectors performed weakly.
Interviewees believe the shrinking-and-diverging tape reflects that short-term market sentiment has somewhat stabilized, but upward momentum is insufficient and the rebound has not yet been effectively confirmed by trading volume. Next week, the A-share market is likely to maintain a range-bound consolidation pattern; whether turnover can return above 2 trillion yuan is the core indicator for observing sentiment repair. With the market direction still unclear, it is advisable to keep some cash on hand to cope with potential volatility.
The A-share market maintained narrow-range oscillation throughout the day, edging higher at the close, with all major indices closing mildly higher. The Shanghai Composite rose 0.04% to 3,905.20 points, the ChiNext rose 1.43% to 3,545.58 points, and the Shenzhen Component rose 0.87%. The CSI 300, SSE 50 and STAR 50 rose slightly, while the Beijing Index 50 fell 0.57%. Market trading sentiment was cautious; the three-market turnover shrank by 201.7 billion yuan to 1.89 trillion yuan. In terms of leverage funds, they dipped slightly over the past two days - as of August 20, the three-market margin balance fell to about 2.67 trillion yuan.
Tech stocks surged, with PCB, optical communication modules, electronic components, base metals, precious metals and MLCC sectors performing strongly. The pharmaceutical and consumer sectors were weak, with chemical pharma, innovative drugs, traditional Chinese medicine production, medical services and agriculture sectors falling sharply. Both the nonferrous metals and communications sectors rose over 2%, while petroleum and petrochemicals, power equipment, national defense and military, and electronics sectors also performed brightly. The biomedicine sector fell over 3%, and agriculture, forestry, animal husbandry and fisheries, beauty and personal care, food and beverage, and real estate fell over 1%; commercial retail and banking sectors trended weakly.
Xia Fengguang, fund manager at Rongzhi Investment, analyzed that the A-share market as a whole performed weakly this week, with a deep correction on Wednesday and a larger pullback in the sci-tech growth direction, reflecting that after the collapse of the crowded trade, market capital divergence remains prominent. Relatively speaking, indices such as the SSE 50 and CSI 300 were more resilient, and blue-chip ETFs showed signs of incremental capital inflow, with the market overall in a rebalancing phase. This week the precious-metals sector erupted, mainly because gold rallied strongly, reclaiming the 4,500-dollar mark, with the direct catalyst being the U.S. Treasury's August 19 announcement to double the scale of long-term Treasury buybacks, driving U.S. long-bond yields lower. Gold's strength signals considerable expectations for mid-term liquidity easing.
Combining multiple internal and external factors, how will the A-share market play out next week, and what risk points deserve vigilance? Li Shiyu, fund manager at Xiaoyu Investment, expects the market to be at a rather special juncture. The A-share market began an oversold rebound in early August, with the average share price continuously recovering; this Wednesday's tape showed the most pronounced "losing-money effect" since this round of rebound, meaning this oversold rebound has basically ended. The market has now entered a volume-contraction and divergence phase, awaiting the concentrated release of listed companies' interim reports. Although some companies have issued performance forecasts, investors still need to watch for the risk of some names suffering earnings blowups.
Tong Diyi expects the A-share market to largely continue its range-bound consolidation pattern next week, and whether turnover can return above 2 trillion yuan is key to observing sentiment repair. He highlighted three risks: first, the impact of overseas market fluctuations and changes in Fed policy expectations on risk appetite; second, during the dense interim-report disclosure period, the performance-disproof pressure on some highly valued varieties; third, the disturbance of geopolitical events to commodities and exchange rates.
Li Yuankai, fund manager at Huayan Private Equity, pointed out that if the market fails to break through the pressure of the downtrend line with increased volume, there may be a secondary pullback and a test of the 3,741-point support in the next one to two weeks. Currently it is necessary to watch whether U.S. Treasury yields keep hitting new highs and the feedback from overseas tech stocks. In addition, during the dense interim-report disclosure period, the market is highly sensitive to earnings changes, and related risks cannot be ignored.
Yuan Huaming, general manager of Huihui Chuangfu Investment, analyzed that after the recent full adjustment, the market's downward momentum has largely been released. Liquidity easing and policy support underpin the market, but headwinds such as the pace of domestic economic recovery and geopolitical conflicts will still cause disturbances, and the market may slowly repair amid oscillation. He suggested tracking the market from four dimensions: first, the trend of U.S. stocks and U.S. Treasury yields, as rising rates will suppress high-valuation sectors such as technology; second, domestic policy moves - fiscal stimulus benefits infrastructure, consumption, high-end manufacturing and AI semiconductors, and industrial policy will drive the fundamentals and stock performance of related industries; third, domestic economic data, to capture macro and industrial opportunities and risks; fourth, the flow of institutional funds such as northbound capital, whose long-term allocation direction often signals the next-stage market main line.
With the market oscillating and diverging and no new main line formed, with tech and traditional stocks forming a seesaw effect, how should one manage positions and allocation? Tong Diyi suggested controlling positions at 50%-70%, using high-dividend and gold and other defensive varieties as the base position, participating in tech growth in bands, and patiently waiting for the market to confirm direction with increased volume before adding positions. Maintain steady balance, avoid aggressive chasing of highs. Gold stocks can be allocated as a ballast, benefiting from global central-bank gold buying and geopolitical risk premia; for the tech direction, prefer subsectors with high earnings certainty such as communications and computing power, positioning on dips; for traditional consumption and medicine, keep underweight or patiently wait for left-side signals, and avoid frequent position changes amid sector rotation to prevent return erosion.
Li Yuankai suggested that tech names need to be combined with interim-report performance before deciding whether to add further positions. This week the market's defensive characteristics were prominent; attention can be paid to defensive opportunities brought by the pharmaceutical, agricultural and food sectors.
Cheng Tianyi believes the sector-rotation pattern will continue. Technology, as the prior main line, showed rebound signs after a sharp correction. Non-tech directions are mostly rotational rebounds; without sustained positive catalysts, it is difficult to produce a trend reversal. Looking ahead, the tech industry trend has not been disproven and still has some continuity; one can position in core leaders on dips along the logic of earnings realization plus real orders. Non-tech sectors should be viewed with a rotation mindset - chasing highs offers poor value, with risk greater than opportunity.
Li Shiyu said that after a major adjustment, the oversold rebound has basically ended, and the market awaits the formation of a new main-line market. Currently in the dense interim-report disclosure window, the tape is in a volume-contraction and divergence adjustment phase. Investors should sort out their holdings: for stocks whose K-lines have not broken down, moderate high-sell-low-buy is possible; for those whose K-lines have broken down, consider exiting at the right time.
Yuan Huaming further analyzed that the market's previous extreme imbalance has been somewhat repaired, but the overall direction remains unclear, and it is advisable to keep some cash to cope with potential volatility. On one hand, internal divergence has emerged within the tech sector represented by AI, and some traditional industries are recovering under the push of industrial policy. Mid-to-long-term, tech is still expected to become the market main line, but it is not advisable to concentrate all funds on the tech track; tech can be allocated as a core asset. On the other hand, names that have risen sharply earlier can take profits in batches, retaining funds to seize mid-to-long-term opportunities. Enterprises with technical barriers and long-term development space can be positioned in batches on pullbacks. Traditional-industry leaders with low valuations, stable operations and industrial-policy support can be moderately allocated to hedge volatility.
Bi Mengran said investors should not heavily bet on a single track at once, but can make balanced allocations. On one hand, retain some tech-hardware base positions with earnings-realization ability; on the other hand, moderately allocate reasonably valued names in cyclical, consumer and pharmaceutical sectors to disperse volatility risk from a single sector. When no clear volume signal appears, it is unsuitable to chase short-term hot sectors. From a time dimension, the tech market still needs time to bottom out. Traditional cyclical varieties such as nonferrous metals and petroleum and petrochemicals rely more on external prices and safe-haven sentiment, with more pulsed moves and uncertain continuity.
