Eliza Wong
Market Performance and Investor Sentiment Overview
During the week of September 15-19, China’s A-share market demonstrated mixed performance with elevated trading volumes consistently exceeding 2.3 trillion yuan for five consecutive sessions. The Shanghai Composite Index declined 1.3% to close at 3820.09 points, while the Shenzhen Component Index gained 1.14%, the ChiNext Price Index rose 2.34%, and the STAR 50 Index advanced 1.84%. The Beijing Exchange 50 Index underperformed with a 1.43% decline.
Sector Performance Divergence
Sector performance showed significant variation according to Shenwan primary industry classification. Coal and power equipment sectors led gains with weekly advances exceeding 3%, followed by electronics, automotive, and machinery equipment sectors with increases above 2%. Conversely, financial sectors faced pressure with banking and non-ferrous metals declining over 4%, while non-bank financial institutions dropped more than 3%.
Capital Flows and Institutional Activity
Net outflows from main funds totaled 202.685 billion yuan for the week, with eight sectors experiencing outflows exceeding 10 billion yuan. The computer, electronics, and power equipment sectors saw the most significant outflows at 25.986 billion yuan, 24.24 billion yuan, and 23.035 billion yuan respectively. Only the steel sector recorded minor net inflows of 92.0555 million yuan.
Retail Investor Survey Methodology
Data Bao (数据宝) released its weekly survey on September 20 titled “Facing Resistance at 3900 Points: Where Will A-Shares Head Next Week?” The survey gathered responses from nearly 4,000 participants, providing valuable insights into retail investor sentiment. Demographic analysis revealed 52% of respondents were veterans with over 10 years of market experience, while 18% had 5-10 years experience, and another 18% possessed 1-5 years experience, indicating a relatively sophisticated respondent base.
Investor Positioning and Market Participation
Positioning changes revealed 24% of respondents increased their exposure, while 22% reduced positions and 6% liquidated entirely. The remaining 48% maintained existing positions. Overall market leverage slightly decreased with “full position plus margin financing” and “50%-100% position” categories both declining 4 percentage points to 6% and 35% respectively. Meanwhile, “full position,” “below 50%,” and “empty position” categories increased by 1, 3, and 2 percentage points to 37%, 17%, and 5% respectively.
Profitability Assessment
The survey indicated modest profitability with approximately 51% of investors reporting gains. Specifically, 42% achieved profits under 10%, while 9% realized gains exceeding 10%. On the negative side, 35% experienced losses under 10%, and 13% suffered declines exceeding 10%.
Market Outlook and Index Projections
Investors expressed divergent views on near-term market direction. The most prevalent expectation (44%) anticipated sideways movement between 3800-4000 points. Bullish and bearish sentiments were evenly balanced at 26% each, with equal proportions expecting either a breakthrough above 4000 points or a decline below 3800.
Long-Term Index Targets
Regarding the Shanghai Composite’s potential peak in the current bull market, 39% of respondents targeted 4000 points (modestly above current levels), 34% projected 5000 points, 8% anticipated 6000 points, and 20% expected levels exceeding 6000 points. Risk assessment revealed 56% perceiving medium risk, 18% viewing high risk, and 19% considering low risk conditions.
Sector Preferences and Macroeconomic Influences
Technology and consumer sectors gained popularity, both increasing 3 percentage points to 38% and 10% respectively as preferred investment directions. Conversely, non-ferrous metals declined 5 percentage points to 10% following the Federal Reserve’s 25-basis-point rate cut on September 18, which triggered profit-taking in previously favored sectors.
Global Monetary Policy Impact
Analysts noted that the Federal Reserve’s rate cut typically weakens the US dollar and supports commodity prices. This environment may create配置价值 (allocation value) for combinations of safe-haven assets like gold and risk assets including industrial metals and technology stocks. The pre-announcement speculation had driven substantial gains in non-ferrous metals, leading to natural profit-taking after the actual decision.
Strategic Implications for Market Participants
The survey results suggest cautious optimism among Chinese equity investors despite recent volatility. With 51% of participants reporting profits and nearly a quarter increasing exposure, underlying sentiment remains constructive. However, the divergence in market outlook reflects uncertainty about near-term direction, particularly around the psychologically important 4000-point level.
Professional investors should monitor retail sentiment indicators alongside institutional flow data, as the combination provides valuable contrary indicators during key market inflection points. The continued high trading volumes suggest active participation across investor classes, providing liquidity for both entry and exit strategies.
Actionable Insights for Portfolio Management
– Sector rotation patterns favor technology and consumer discretionary over financials and commodities
– Retail sentiment suggests support around 3800 points with resistance near 4000
– Federal Reserve policy continues to influence Chinese market sectors unevenly
– Positioning data indicates moderate risk appetite with selective leverage reduction
Market participants should maintain balanced exposure while monitoring key technical levels and policy developments from both the Federal Reserve and 中国人民银行 (People’s Bank of China). The current environment favors stock-specific selection over broad market bets, particularly in sectors demonstrating relative strength during recent volatility.
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