The ChiNext Index surged by 1.95%, reaching a new high for the period, with the total trading volume in the two markets exceeding 2.4 trillion yuan, indicating a significant adjustment in the allocation of major funds.At 2 AM Beijing time on September 18, the Federal Reserve will announce its interest rate decision, with the market expecting a 25 basis point rate cut. On the eve of this globally watched event, major funds in the A-share market are undergoing large-scale adjustments.On September 17, all three major indices closed higher. The Shanghai Composite Index rose by 0.37% to 3876.34 points, the Shenzhen Component Index increased by 1.16% to 13215.46 points, and the ChiNext Index performed particularly well, rising by 1.95% to 3147.35 points, continuing to set new highs for the period.01 The market fluctuated higher throughout the day, with the ChiNext leading the reboundThe A-share market showed a strong pattern on Tuesday, with the Shenzhen Component Index and the ChiNext Index both reaching new highs, and the ChiNext’s increase approaching 2%, indicating that growth stocks are once again favored by funds.The total trading volume in the two markets increased by 35.324 billion yuan compared to the previous trading day, totaling 23767.46 billion yuan, continuing to maintain a high level. The market is active, with strong bullish sentiment.In terms of the number of stocks rising and falling, over 3600 stocks in the entire market rose, far exceeding the number of declines, indicating a clear overall profit effect. The northbound capital trading volume reached 287 billion yuan, showing a high level of foreign participation.02 Major funds show clear adjustment pathsDespite the overall market rise, major funds have made significant adjustments between different sectors, showing a characteristic of “abandoning the high for the low.”The electric new industry, diversified finance, and power equipment sectors have attracted major funds. Semiconductor giant SMIC has become the market’s biggest highlight, with a net purchase of 1.357 billion yuan, leading to a significant rise in its stock price.The new energy sector has also been favored by funds. BYD received a net purchase of 1.332 billion yuan, CATL saw a net inflow of 1.243 billion yuan, and TBEA also gained a net inflow of 1.327 billion yuan.In contrast, the computer sector has become a “disaster area” for major fund sell-offs, with a net outflow exceeding 4.9 billion yuan throughout the day. The cultural media and pharmaceutical sectors also experienced capital outflows.03 Federal Reserve rate cut expectations impact the marketThe expectation of a Federal Reserve rate cut is a key factor influencing the current market capital allocation. The market generally expects the Federal Reserve to cut rates by 25 basis points, lowering the U.S. policy interest rate range to 4%-4.25%.According to the Chicago Mercantile Exchange (CME) “FedWatch,” the probability of a 25 basis point rate cut at this meeting is as high as 95.9%, while the probability of a 50 basis point cut is only 4.1%.Industrial Securities analysis points out that historically, A-shares have benefited from liquidity easing and risk appetite boosts following “preventive rate cuts.” In terms of sectors, TMT and other technology sectors, as well as core consumer assets, are favored.According to Bai Xue, Senior Vice President of the Research and Development Department at Dongfang Jincheng, the Federal Reserve’s rate cuts typically boost risk appetite by lowering financing costs and enhancing liquidity, which will drive global asset allocation towards risk assets.04 Sector performance shows stark contrastsFrom the sector performance perspective, the market exhibits clear structural characteristics.The diversified finance sector led the gains, with an increase of 3.48%. COFCO Capital hit the daily limit, Jianyuan Trust hit the daily limit, and Zhongyou Capital rose over 5%, while Shaanxi Guotou A, Nanhua Futures, Zhejiang Dongfang, and Wukuang Capital all rose over 4%.The optical and optoelectronic sector performed strongly, with an increase of 2.07%. Wind power equipment, motors, and electronic chemicals also saw increases exceeding 2%.In contrast, the computer sector underwent significant adjustments, with a net outflow exceeding 5.7 billion yuan in half a day and over 4.9 billion yuan throughout the day. Shenghong Technology faced a net sell-off exceeding 1.4 billion yuan, and Huasheng Tiancheng had the highest net outflow of major funds.The precious metals sector led the market decline, with a drop of 2.57%. Western Gold fell over 5%, while Chifeng Gold and Xiaocheng Technology fell over 3%. Recent adjustments in international gold prices, the rebound of the U.S. dollar index, and rising market risk appetite have put pressure on safe-haven assets like gold.05 Sectors with continuous capital inflows revealedFrom the recent movements of major funds, some sectors have received continuous inflows of capital.The power equipment sector has consistently attracted major funds. Companies like CATL and TBEA have continuously received large capital inflows.The automotive sector is also a direction for continuous capital accumulation. BYD received a net purchase of 1.332 billion yuan, and the automotive parts sector continued to be strong, with multiple stocks hitting the daily limit.The electronics sector, especially in the semiconductor field, has seen significant capital inflows. SMIC received a massive net purchase from major funds, indicating a strong preference for the semiconductor industry.The diversified finance sector has recently begun to attract capital attention, with a net inflow of 1.232 billion yuan on Tuesday, and the sector’s increase reached 3.48%.06 Sectors with continuous capital outflows need cautionOn the other hand, some sectors have experienced continuous capital outflows, requiring investors to remain vigilant.The computer sector has become a “disaster area” for capital flight, with a net outflow exceeding 4.9 billion yuan on Tuesday. This marks several consecutive days of capital outflows for this sector.The pharmaceutical and biotechnology sector has also faced continuous capital outflows. In the early trading session, major funds net outflow from the pharmaceutical and biotechnology sector continued throughout the day.The cultural media sector has similarly experienced capital withdrawal. On Tuesday, there was a net outflow of 3.012 billion yuan, indicating a cautious attitude from funds towards this sector.The commercial retail sector showed weak performance, with a drop of 1.46%. Despite the upcoming National Day Golden Week, market concerns about weakened consumer power have resulted in insufficient rebound momentum for the sector.07 Institutions optimistic about the medium to long-term marketDespite short-term market fluctuations, institutions remain optimistic about the medium to long-term trend of A-shares.Yang Delong, Chief Economist at Qianhai Kaiyuan Fund, predicts that the Federal Reserve’s rate cut may trigger a wave of rate cuts by global central banks. If monetary easing continues and extremely low interest rates are maintained, it could boost the A-share market and lead to a second wave of upward momentum.The Chen Guo team at Dongfang Caifu Securities points out that during the preventive rate cut period, A-shares and Hong Kong stocks have shown varying performances influenced by their fundamentals, but structurally, they point towards growth sectors and other interest rate-sensitive industries that benefit from low-rate valuation expansion.Financing funds continue to be optimistic about the market, with the financing balance increasing to 23679.68 billion yuan, a growth rate of 9.61‰. The net inflow of financing funds is directed towards electronics, computers, machinery equipment, non-bank finance, and automotive sectors.08 Outlook for future investment strategiesLooking ahead, the A-share market is expected to continue exhibiting structural characteristics.The potential onset of the Federal Reserve’s rate cut cycle and the warming of public fund issuance may become new driving forces for the market. CICC suggests focusing on three major directions: stocks heavily held by foreign capital, companies likely to benefit from the appreciation of the renminbi, and targets that are highly sensitive to policies.In terms of industry allocation, attention can be paid to:1. Sub-sectors within technology, such as artificial intelligence, semiconductors, and consumer electronics;2. Environmentally friendly sectors benefiting from liquidity easing, such as new energy and wind power equipment;3. High-tech sub-sectors within the consumer sector.Investors need to be cautious of market volatility risks, manage positions reasonably, and avoid chasing highs and selling lows. In the medium to long term, the A-share market is still expected to continue its upward trend.
This article is for reference only and does not constitute any investment advice. The market has risks, and investment should be cautious.