Eliza Wong
Market Performance Overview
China’s A-share markets displayed pronounced sector rotation on September 12, 2025, with major indices closing lower amid divergent sector performances. The Shanghai Composite Index (上证指数) declined 0.12%, while the Shenzhen Component Index (深证成指) dropped 0.43% and the ChiNext Index (创业板指) fell 1.09%. The Beijing Stock Exchange 50 Index (北证50) witnessed the steepest decline at 2.11%. Total trading volume across Shanghai, Shenzhen and Beijing markets reached 2.5483 trillion yuan, increasing by 83.7 billion yuan from the previous session.
Broad Market Participation
Market breadth showed nearly 2,000 advancing stocks against over 3,300 declining issues, indicating selective profit-taking after recent rallies. The sector rotation pattern emerged as investors reassessed valuations across different segments of the market.
Sector Performance Analysis
The trading session revealed clear winners and losers, with traditional sectors outperforming while recent high-flyers faced selling pressure.
Outperforming Sectors
Non-ferrous metals, precious metals, and storage chips led the gains. Hunan Silver (湖南白银), Northern Copper Industry (北方铜业), and Shengda Resources (盛达资源) all reached涨停 (daily price limit up). The storage chip sector gained momentum in afternoon trading, with Ingenic Semiconductor (北京君正), Shannon Semiconductor (香农芯创), and Jiangbolong (江波龙) all surging over 10%.
Underperforming Sectors
Insurance, baijiu (白酒, Chinese liquor), banking, securities, and PEEK material concept stocks declined significantly. Banking stocks weakened in afternoon trading, with Shanghai Pudong Development Bank (浦发银行) falling over 3%. Baijiu stocks gave up early gains, with Jiugui Liquor (酒鬼酒), Shede Spirits (舍得酒业), and Shuijingfang (水井坊) all closing lower.
Technology Sector Divergence
The technology sector displayed a split personality, with some segments rallying while others faced substantial selling pressure.
Semiconductor Strength
VeriSilicon Microelectronics (芯原股份) resumed trading with a 20% limit-up gain after announcing its acquisition of Nuclei System Technology (芯来科技). The company disclosed record-high order backlogs of 30.25 billion yuan as of Q2 2025, with new orders worth 12.05 billion yuan signed between July 1 and September 11, representing 85.88% year-over-year growth.
Optical Module Weakness
The so-called “Yi Zhong Tian” stocks – Sunsea Telecommunications (新易盛), Zhongji Innolight (中际旭创), and TFC Optical Communication (天孚通信) – all declined significantly following Morgan Stanley’s rating downgrades. The investment bank suggested investors take profits after months of substantial gains, downgrading Sunsea Telecommunications and TFC Optical Communication to “underweight” while maintaining “overweight” on Zhongji Innolight but with a reduced price target.
Market Dynamics and Rotation Patterns
The ongoing sector rotation reflects evolving investor sentiment and changing fundamental narratives across different market segments.
Rotation Drivers
The current market rotation stems from several factors: valuation disparities between sectors, changing growth expectations, and external market influences including Oracle’s 6% decline in U.S. trading after analysts raised concerns about its dependence on OpenAI as a single customer. This sector rotation represents a healthy market dynamic where capital flows toward relatively undervalued segments while taking profits from overextended sectors.
New Theme Emergence
The market continues to identify new investment themes, recently focusing on CPC (Co-Packaged Copper) interconnection technology. Luxshare Precision (立讯精密), a leader in this emerging theme, reached limit-up yesterday and gained over 5% in morning trading before closing slightly lower. The company provides integrated solutions spanning copper connections, optical modules, server power, and thermal management systems, with multiple high-value products already in mass production.
Investment Implications and Strategies
Professional investors should consider several factors when navigating the current rotation environment.
Analyst Perspectives
Guosheng Securities (国盛证券) maintains a positive outlook on VeriSilicon Microelectronics, citing its position as an AI ASIC+IP leader and the strategic benefits of its recent acquisition. The firm believes the company will continue benefiting from the AI industry wave and maintains its “buy” rating.
Portfolio Considerations
Pacific Securities (太平洋证券) notes that the current index consolidation has been shorter than expected, reflecting bull market strength. The firm recommends focusing on sectors with higher safety margins including chemicals, agriculture, steel, and photovoltaics, while suggesting that semiconductor and optical module adjustments have likely run their course. They also highlight innovative pharmaceuticals as attractive opportunities during pullbacks.
Future Catalysts
Everbright Securities (光大证券) expects continued market advancement with technology growth styles likely maintaining leadership. The upcoming Huawei Connect 2025 conference in Shanghai from September 18-20, focusing on “leaping industry intelligence,” may provide additional catalysts for related concept stocks.
Navigating Market Rotations
The current market environment presents both challenges and opportunities for investors. Successful navigation requires understanding sector dynamics, monitoring valuation metrics, and maintaining awareness of emerging themes. The ongoing sector rotation demonstrates market health rather than weakness, as capital seeks new opportunities while managing risk in extended segments. Investors should maintain diversified exposure while being prepared to adjust allocations as rotation patterns evolve. The key to success in such environments lies in disciplined risk management and focus on fundamental drivers rather than short-term price movements.
