Overview
On Monday (Oct 26), A-shares showed extreme divergence: the Shanghai Composite closed at 3,697.52, up 0.19%; the Shenzhen Component at 11,534.38, down 1.19%; the ChiNext at 2,638.23, down 1.71%. Turnover was 1.61 trillion yuan, 347.5 billion lower than the prior session, with over 3,100 stocks declining. Staples, gaming, pharmaceutical retail and liquor led gains; components, precious metals, semiconductors and electronics lagged—a clear split between value and growth, large- and small-caps.
A constructive signal emerged on the funding side: by Oct 26, the first batch of active ETFs had raised about 25.3 billion yuan; products from Huatai-PineBridge, Southern, ChinaAMC and Ping An each hit the 2-billion-yuan cap, and with three earlier closed funds, seven products reached the ceiling, likely listing together in late November. As risk appetite cooled, the sustained inflows into broad-based and active ETFs became a key liquidity absorber.
Background & Interpretation
1. Macro and Policy Context
The 20th CPC Central Committee’s Fifth Plenum (Oct 26–29) is deliberating the “15th Five-Year Plan” proposals under an “internally accommodative” framework—proactive fiscal, moderate monetary, “AI+”, new-quality productive forces and investment-financing reform. The PBOC conducted a 700-billion-yuan MLF on Oct 26. Meanwhile the Fed meets Oct 27–28, with results due 2:00 a.m. Beijing time Oct 29; markets expect a hold but price near-certain hikes by December.
2. Core Drivers and Underlying Mechanism
The divergence reflects a tug-of-war between domestic support and external pressure. Domestic policy underpins valuations, but pre-meeting expectations, in-meeting volatility and external shocks—U.S. Treasury yields above 5%, and Brazil’s post-election selloff (IBOVESPA −13.88%, real −11%)—cap risk appetite. Structurally, new-quality and defensive names outperform while high-valuation, externally sensitive sectors lag.
3. Market Structure and Industry Impact
The concentration of active-ETF raises signals that both passive and active equity products are becoming key vehicles for household wealth, offering transparent, low-cost allocation tools. Buy-side ETF adoption by private funds is also rising—151 managers appeared among top-10 holders of 207 newly launched ETFs. The ecosystem is shifting from pure active management to a “active + index + ETF” mix.
Implications & Outlook
Near term, markets may stay range-bound and bifurcated until the Plenum tone and Fed decision clarify; third-quarter earnings, U.S. tech stability, and Treasury/ FX paths are the key variables. Medium term, the accommodative framework and ETF supply expansion support A-shares. Favor balanced allocation, position control and verifiable earnings.
Takeaways for Industry Participants
- Wealth managers can use the active-ETF expansion to enrich client toolkits and channel long-term money into index products.
- Listed firms should align with the “15th Five-Year” window around new-quality productive forces and deliver real earnings.
- Investors should guard against pre-meeting expectation overdrafts and watch overseas rate turning points.
This column compiles industry information and shares technical perspectives; it does not constitute investment advice.