Market trading turned choppy on September 23, with the ChiNext Index and the Shenzhen Component Index opening higher but closing lower. By the end of the session, the Shanghai Composite Index fell 0.39%, the Shenzhen Component Index dropped 0.64%, and the ChiNext Index declined 0.6%.

In terms of sector performance, the PCB concept showed strength, while CRO and quantum technology stocks were also active. Real estate stocks were mixed. On the downside, media and film/TV sectors experienced adjustment. More than 3,500 stocks across the market closed lower.

Trading volume contracted noticeably, with the combined turnover of Shanghai and Shenzhen markets reaching 1.76 trillion yuan, a decrease of 370.6 billion yuan from the previous trading day. With the market closed on Friday, today (Wednesday) has become the "cash withdrawal day" for A-share investors this week, and the "pre-holiday effect" is beginning to show.

By market close, total turnover across the market was just 1.78 trillion yuan, down more than 370 billion yuan from the prior day. All three major indices closed lower, with decliners outnumbering advancers. It appears that some funds' "preemptive exit" on Tuesday was not simply a joke after all.

As mentioned in Monday's review, in 4 of the past 5 years, the market has seen volume contraction ahead of the National Day holiday, sometimes by around 10% or even exceeding 20%. Based on the average daily turnover of 1.93 trillion yuan over the past 20 trading days (August 26 to September 22), if this year's "pre-holiday effect" brings about a 10% contraction, volume would fluctuate near the 1.74 trillion yuan level. Today's 1.78 trillion yuan falls right in line with that estimate, potentially marking the start of the "pre-holiday volume shrinkage."

The sudden drop in volume has impacted today's market in at least two ways.

First, high-profile momentum stocks have collectively retreated. For example, C Zhongsu, a newly listed stock that surged 683% yesterday, reversed sharply today, plunging 34.53%. Among stocks that hit the daily limit down or fell 10% or more, many were multi-day limit-up stocks or popular names that hit new highs yesterday, including Wuzhou Medical, Huamei Holding, Sanyangma, Mindong Electric Power, and Xinhua Pharmaceutical. The absence of active capital has made it difficult for these short-term or intraday high-volatility stocks to absorb selling pressure, forcing them to move lower.

Second, large-cap stocks that haven't risen much recently but require significant liquidity have also seen notable volume contraction. For instance, Zhongji Innolight, which often ranks first in market turnover, saw its trading volume shrink to just 13.68 billion yuan today, down sharply from Tuesday's 22.34 billion yuan. According to Wind data, among the top 10 stocks by turnover on Tuesday, all saw volume shrink by at least 27% today, with some contracting by nearly 56%.

However, since these stocks haven't experienced significant recent volatility, their pullbacks have been relatively "gentle." Moreover, given their high index weightings, the three major indices have only been moving in shallow ranges, with none falling below their 5-day moving averages.

A research report from Datong Securities suggests that although rate-hike concerns have been digested by the market, the global AI capital expenditure wave has entered a brief "consolidation period" with weak upward momentum. Combined with pre-holiday risk-aversion sentiment, capital is unlikely to form a united upward force. In the absence of major news, the market may find it difficult to quickly establish a new leading direction.

Therefore, the short-term market will likely maintain its "no clear leader" characteristic, with frequent sector rotation becoming the norm. However, absent major events, volatility may remain relatively moderate. In the medium-to-long term, the market is still expected to return to the technology sector as its main theme.

From a sector perspective, the shrinking volume has forced still-active capital in the market to rotate from high to low. Tonghuashun data shows that among the top 10 declining industries, apart from oil & gas, power, and diversified financials which have been falling consecutively, the others were all sectors that led gains or pulled back from highs on Tuesday. Meanwhile, on the concept index gainers list, technology themes leading today, such as PCB, glass substrates, and lab-grown diamonds, had underperformed on Monday and Tuesday.

Overall, this reflects the so-called rotation pattern.

According to reports, BOE Chairman Chen Yanshun announced at the 2026 BOE Global Innovation Partner Conference that the company will invest more than 80 billion yuan in R&D over the next five years, with procurement spending exceeding 800 billion yuan. He also confirmed that investment plans for two mass-production lines, covering glass-based perovskite devices and glass-based packaging substrates, will be finalized within the coming year. This news sparked short-term market attention on the sector.

On the PCB front, institutional research reports indicate that as upstream raw material prices continue to rise, downstream PCB manufacturers have recently begun re-quoting prices. This move signals that the cost transmission mechanism from upstream raw materials, through midstream copper-clad laminates, to downstream PCBs has been fully established. The market widely expects the third quarter of 2026 to mark the substantive starting point for profit improvement across the entire supply chain.