Late-Session ETF Buying Fails to Lift Technology Stocks

Highlights

Chinese equities delivered a mixed session on October 26. The Shanghai Composite recovered from its intraday low to close higher, while the Shenzhen Component, ChiNext, and STAR 50 indexes fell. Robotics, gaming, consumer, and oil-and-gas shares gained ground, but computing-hardware stocks, including PCB, MLCC, and CPO-related names, declined. Near the close, unexplained heavy trading in several CSI 300 ETFs drew attention. Analysts cautioned that fund buying may absorb selling pressure and improve trading conditions, but cannot directly increase corporate revenue. Any sustained rebound therefore remains dependent on earnings and broader fundamentals.

Sentiment Analysis

• Overall tone — mixed: The session combined a modest recovery in the Shanghai Composite with declines across the Shenzhen Component, ChiNext, and STAR 50 indexes. The article presents neither a broad market rally nor a uniform selloff.


• Positive signals: Robotics shares remained active, gaming stocks climbed, consumer shares strengthened, and oil-and-gas stocks advanced. The Shanghai Composite also finished above its intraday low.


• Negative signals: Computing-hardware shares fell, including stocks associated with PCB, MLCC, and CPO themes. More individual stocks declined than advanced, and the STAR 50 index lost more than 2%.


• Why the outlook remains cautious: Late-session ETF buying may provide market support, but analysts stressed that it cannot replace improvement in corporate revenue or earnings expectations. The article also notes that market stress indicators had not reached extreme levels, leaving concern about a renewed downturn.

Article Text

The optimism following the previous Friday’s sharp intraday rebound, described in the source as a “miracle day,” did not carry over into Monday. On October 26, Chinese mainland indexes showed divergent performances. The Shanghai Composite Index recovered from its intraday low and ended higher, while the Shenzhen Component Index, ChiNext Index, and STAR 50 Index closed lower. The Shanghai Composite gained 0.19%, the Shenzhen Component fell 1.19%, the ChiNext Index declined 1.71%, and the STAR 50 Index dropped more than 2%.

The breadth of the market was also uneven. A total of 2252 stocks rose, 59 stocks reached the daily limit, and 3157 stocks fell. These figures indicate that gains in selected themes did not translate into a broadly positive session. The Shanghai Composite’s recovery was therefore set against weakness in several growth-oriented indexes and a larger number of declining stocks.

Robotics-related shares continued to attract interest. Shangwei New Materials (上纬新材), Zhengyu Industries (正裕工业), Wanxiang Qianchao (万向钱潮), and Fenglong (锋龙股份) were among the stocks that hit their daily limits. The source linked attention to the theme with widespread discussion over the weekend, when 44 telephone conferences on physical AI drew notice. The report does not provide further details about the conferences or quantify their direct effect on trading.

Gaming shares rose as a group, with Shengtian Network (盛天网络) gaining more than 14%. Consumer-related sectors, including liquor and food, also strengthened. Huangtai Liquor (皇台酒业), Guifaxiang (桂发祥), and Qingdao Foods (青岛食品) were among the companies to reach their daily limits. In the energy sector, oil-and-gas shares moved higher. PetroChina (中国石油) rose nearly 5% and reached its highest level since May 2008.

By contrast, shares tied to computing hardware weakened. The report specifically cited printed circuit boards (PCB), multilayer ceramic capacitors (MLCC), and co-packaged optics (CPO) as areas under pressure. Aohong Electronics (澳弘电子), Huazheng New Material (华正新材), and Jinan Guoji (金安国纪) were among the stocks that fell to their daily limits. This divergence between active thematic gainers and declining technology-hardware names contributed to the market’s mixed character.

Trading became notable again near the close, when what the source described as mysterious funds appeared to act, accompanied by heavy volume in multiple CSI 300 exchange-traded funds (ETFs). The report does not identify the buyers or specify the amount of ETF trading. It presents the activity as a possible source of market support, while also recording an important qualification from analysts: support buying can absorb selling and help improve trading order, but it cannot directly make company revenues grow.

A recent strategy report from Guojin Securities (国金证券) assessed the previous Friday’s sharp intraday rebound as a move that had not fully established a durable market bottom. The report said that fear had approached, but had not reached, an extreme. It also argued that deleveraging remained some distance from a deep-cleansing stage. These imperfections, in its view, did not rule out a rebound, but could limit its size and duration and leave open the possibility of a second test below the earlier low.

The central issue is whether market support can be accompanied by stronger fundamentals. ETF buying may help stabilize trading, but a lasting recovery remains constrained if earnings forecasts continue to fall. The session’s sector gains and late-day trading activity offered signs of support, while weakness in technology hardware and concerns about earnings kept the outlook cautious. The article thus describes a market attempting to recover, but still exposed to pressure from fundamentals and incomplete deleveraging.

Key Insights Table