Today, major indices in a-shares in hk surged in the morning but fell back. In the afternoon, the sse composite index fell below 2900 points. At the same time, the Hang Seng Tech Index briefly turned downwards, with significant narrowing of gains in A50 futures, and the selling pressure on individual stocks started to increase.

It is worth mentioning that pharmaceutical stocks surged collectively, with Wuxi Bio leading the way with over an 8% surge, followed by Wuxi Apptec and others.

So, what has happened again?

Afternoon sudden change

In the morning, a-shares in hk surged significantly, with high spirits. However, in the afternoon, the market underwent a sudden change, with major indices rapidly narrowing their gains, a notable increase in selling pressure on individual stocks. Indices related to overseas and Chinese assets also saw significant narrowing of gains, with a slight trend of falling.

So, what exactly happened? Analysts believe there are three reasons:

Firstly, the bearish sentiment in the market has clearly not yet fundamentally reversed. Even as positive news continues to emerge in the market, some funds are still redeeming, especially in a-shares in hk. In addition, after the sharp rise yesterday, many listed companies' major shareholders announced shareholding reduction plans last night, indicating that the current pressure on micro participants' funds still exists.

Next, as the long holiday approaches, leveraged funds currently have a need to withdraw. This can be seen from yesterday's significant increase. The Shanghai Composite Index surged by over 110 points yesterday, yet the margin trading balance increased by less than 1.7 billion yuan. Currently, the margin trading balance is 1362.668 billion yuan, and its proportion to the circulating market value has reached a relatively low level. Following past patterns, leveraging up may have to wait until after the National Day holiday.

Finally, from the perspective of foreign capital, although there has been a major positive signal in monetary policy, foreign investors generally believe that the real economy still needs strong fiscal policy support to truly stabilize. Therefore, for incremental long-term funds, they may also need to wait for the fiscal stimulus to be implemented before large-scale entry may happen. Currently, many foreign investors may be waiting for this signal.

Changes in structure

From a structural perspective, there was a sector that experienced a significant surge today. In the afternoon, pharmaceutical stocks collectively rose, $WUXI BIO (02269.HK)$ surging by over 8% at one point.

The pharmaceutical sector may have been stimulated by a piece of news. According to the U.S. Congress official website, on September 23 local time, there was progress in the legislation of the Biosafety Law in the United States. In the latest amendment, WuXi Biologics has been removed, but WuXi AppTec, BGI Genomics, BGI Geno and its subsidiary Complete Genomics are still included. At the same time, the proposal is expected to be renamed the "Prohibition of Foreign Acquisition of U.S. Genetic Information Act" and will further focus on human data-related businesses. In fact, the pharmaceutical sector can be considered one of the most thoroughly adjusted sectors. Over the past one to two years, this sector has experienced continuous "accidents", with the chips relatively cleaned up, which may be the critical reason for its resurgence.

It is not yet time for the market to close

From the perspective of policy expectations, the market may still be far from the end. Yesterday, the monetary policy fired the first shot, announcing a series of financial policy combinations such as reserve requirement ratio cuts, interest rate cuts, reduction of existing housing loans, and stock market support tools. Institutions believe that this round of policies is the most substantial and wide-ranging in the past year or two, with extremely high market attention.

Zheshang Securities believes that this round of positive financial policy measures is actively addressing hot issues such as financing costs, real estate, and capital markets, which are expected to support stable economic growth and improve market expectations. In terms of major asset classes, the stock market should not be pessimistic, and it is recommended to actively seize the rebound opportunities, focus on the main line of coordinated development and security, and pay special attention to high dividend assets in the context of asset scarcity.

Analysts believe that the key lies in the implementation of follow-up policies. From the perspective of liquidity, according to HTSC's estimate, the reserve cut may generate 1 trillion yuan of liquidity. Some market participants believe that this may be the bullet prepared for subsequent issuance. Logically, after the favorable expectations of monetary policy are released, there is a high probability of fiscal efforts. From a game theory perspective, the current position is not enough to allow block orders to break free from their cost range, meaning that effective profits cannot be generated. Therefore, creating space and boosting popularity are necessary to avoid being passive.

Editor/Somer