Is the A-share market "stratified"? The index remains flat while drastic reshuffling is unfolding within the market.
This week, the A-share market delivered a confusing performance: the Shanghai Composite Index fell by 0.33% cumulatively, with total trading volume exceeding 11 trillion yuan across the five trading days, while 2,918 stocks posted gains.
On one hand, the index stayed almost flat; on the other, a large number of individual stocks saw their prices rise. While main capital recorded net outflows for four trading days, Landun Optoelectronics, after hitting the daily limit for five consecutive trading days and surging by over 140%, was put under key supervision by the stock exchange.
In the same week, institutional funds spent over 5.7 billion yuan to buy shares of two leading CPO players, Eoptolink and TFC.
These seemingly contradictory phenomena coexisting in the same market all indicate that the pricing logic of the A-share market seems to have started to diverge.
Institutions trade on industrial trends, while hot money and quantitative funds trade on restructuring stories and thematic fluctuations. The two types of capital operate independently in the same market without taking over positions from each other.
Divergence Between Index and Individual Stocks: The Market Enters a State of "Liquidity Stratification"
The Shanghai Composite Index barely moved this week, yet 2,918 stocks posted gains. According to common sense, it is difficult for individual stocks to rise broadly when the index does not go up, but this week's data exactly breaks this intuition.
The leading rising industries are comprehensive, communications, and pharmaceutical biology, among which the comprehensive industry rose by 7.21% cumulatively, ranking first in terms of increase.
The leading declining industries are non-ferrous metals, beauty care, and non-bank financials.
Non-ferrous metals and non-bank financials are typical heavyweight sectors, and their decline directly dragged down the Shanghai Composite Index.
While the comprehensive, communications and pharmaceutical sectors are active, their driving force for the index is far less than that of heavyweight stocks.
What is special is the signal that "the comprehensive industry leads the gains".
In the historical experience of the A-share market, the comprehensive industry is a special existence: the companies in this sector usually have unclear main businesses, small market capitalization and mediocre fundamentals, but precisely because of "diversified businesses, small market value and strong transformation expectations", it often becomes the main camp for speculation on restructuring, themes and shell resources.
The comprehensive industry leading gains usually does not mean the start of a fundamental bull market, but that risk appetite shifts from "performance" to "stories".
This shift in risk appetite is the first key to understanding this week's market behavior.
From the perspective of market micro-structure, what really happened in the market this week is that liquidity has shown obvious stratification.
The so-called liquidity stratification simply means that the market is no longer a whole, and capital begins to look for different targets and logics respectively. Institutional funds are concentrated in directions with industrial logic and performance support, such as CPO, optical communications and some innovative drugs; hot money, quantitative funds and retail funds create high volatility in small-cap, restructuring and thematic stocks; heavyweight blue chips and pro-cyclical varieties are continuously drained of capital.
This stratification leads to the divergence between the performance of the index and individual stocks: the index is dragged down by heavyweights, while individual stocks are activated by thematic capital.
It seems lively on the surface, but in fact the profit-making effect is extremely concentrated in a few directions and a few stocks.
This is completely different from a full-scale bull market.
A full-scale bull market is a scenario where all boats rise with the tide, and all sectors rise in rotation. The current market is more like some people surfing in deep water, some picking up shells on the shallow beach, and some getting wet by the waves on the shore. The experiences of participants vary greatly, and whether you can make money depends entirely on where you stand, not on the overall rise or fall of the market. This also explains why nearly 3,000 stocks rose this week, but many people still find it difficult to make profits.
This stratification is a typical manifestation when the market lacks consistent expectations. When the macroeconomic fundamentals do not give a clear direction and there is no strong stimulus signal on the policy side, different types of capital can only look for opportunities according to their respective risk appetite and assessment cycles.
Institutional funds have long assessment cycles and tend to lay out industrial trends; hot money and quantitative funds have short assessment cycles and pursue short-term fluctuation returns. When the two sets of pricing systems operate at the same time, the market presents high structural differentiation and rapid rotation.
Therefore, under this background, when we look at the capital-side data again, we can more clearly distinguish which are noises and which are real signals.
Main Capital Net Outflows for Four Days Are Essentially Position Adjustment
There is another eye-catching data on the capital side this week: main capital recorded net outflows for 4 days, and only recorded net inflows on August 12. As a result, there are voices in the market saying that main capital is fleeing. This conclusion is too simplistic and very misleading.
To popularize relevant knowledge first, the main capital counted by software such as Wind is usually divided according to the amount of a single transaction.
An extra-large order refers to a single transaction of more than 1 million yuan, a large order refers to a transaction between 200,000 and 1 million yuan, and the main capital is the sum of extra-large orders and large orders. Net inflow refers to the amount of actively bought large orders minus the amount of actively sold large orders.
This statistical caliber has obvious limitations in today's era where quantitative trading and algorithmic order splitting are prevalent.
Quantitative institutions often split large orders into countless small and medium orders to hide their trading intentions, so a lot of real institutional funds may not be displayed at all in the statistical caliber, and are instead counted as retail funds.
In other words, net outflow of main capital does not necessarily mean that institutions are retreating in an all-round way, but it does reflect that the active selling pressure at the large order level this week is greater than the active buying pressure.
What we need to pay attention to is not the general net outflow figure, but where the capital flows specifically.
At the industry level, the communications sector saw the largest net inflow of main capital this week, reaching 92.27 billion yuan; the power equipment sector recorded a net inflow of 37.10 billion yuan, and the food and beverage sector recorded a net inflow of 20.84 billion yuan. The sectors with the largest net outflows are electronics at 175.03 billion yuan, non-ferrous metals at 139.66 billion yuan, and computer at 51.36 billion yuan. At the individual stock level, Eoptolink recorded a net inflow of 3.492 billion yuan, TFC recorded a net inflow of 2.28 billion yuan, and the two leading CPO stocks recorded a total net inflow of about 5.77 billion yuan.
Judging from these data, the core action of main capital is not to leave the market, but to adjust positions.
Capital flows out of previously crowded or pro-cyclical directions such as electronics, non-ferrous metals, and computers, and concentrates on flowing into communications, especially the optical communications and CPO tracks.
Therefore, I believe that the main capital in the AI industrial chain this week has actually undergone structural migration, that is, from general electronic hardware to optical interconnection.
But why is the index still not strong? Because many of the sectors that were sold off, such as electronics, non-ferrous metals, and computers, are heavyweight stocks. They are sold off in large orders, and their falling prices directly suppress the index.
While communications, power equipment, and food and beverage are rising, their volume and weight are relatively limited, so they cannot drive the Shanghai Composite Index up.
Thus we see a rare combination: large orders are selling heavyweight stocks, small orders are buying thematic stocks, the index falls slightly, and individual stocks rise broadly.
The sustainability and risks of this combination need to be understood under the framework of stock game.
Stock game means that there is no large amount of new capital entering the market, and the market mainly relies on the redistribution of on-site capital to maintain activity. The trading volume this week reached 11 trillion yuan, with an average daily volume of about 2.2 trillion yuan. It seems that the volume is abundant, but a large part of these transactions are reverse trading and short-term transactions brought about by high turnover, which does not mean that incremental capital is pouring in continuously.
When capital flows out of heavyweights and pours into themes, the index of course cannot strengthen; when capital flows out of themes and returns to heavyweights, thematic stocks will face sharp corrections.
This rapid rotation itself is a typical feature of stock game.
Moreover, after the communications sector rose sharply this week, Shenwan Hongyuan Securities reminded of a risk in its weekend strategy: the position returns of the electronics and communications sectors have returned to near the break-even line, and there may be selling pressure for cashing out in the short term.
This is the "disposition effect": when a stock falls from a high level and then rises back to near the cost line, the willingness of locked-in investors to sell will increase significantly. The communications and optical module sectors have experienced adjustments in the early stage, and now they are rising again, many holders are just out of the loss zone, and their first reaction is to sell and get back their capital first.
Therefore, the medium and long-term logic of the CPO track may hold, but the short-term fluctuation will be very large.
Leading stocks like Eoptolink and TFC have concentrated institutional positions. Once there is any disturbance in the overseas AI chain, the cashing-out pressure will be very concentrated.
The Collision of Landun Optoelectronics' Five Consecutive Daily Limit
For example, Landun Optoelectronics.
It hit the 10% daily limit in all 5 trading days, with a cumulative increase of 148.76%, ranking first in the whole market in terms of gain.
Over the weekend, the Shenzhen Stock Exchange issued an announcement that due to the recent severe abnormal fluctuation of its stock price, "Landun Optoelectronics" was put under key supervision this week.
Why did Landun Optoelectronics rise? Because it suspended trading to plan for a major asset restructuring, and plans to acquire the controlling stake of Lanchuang Technology.
Lanchuang Technology is one of the few domestic equipment manufacturers that have achieved commercial mass production in the field of ultra-narrowband thin film filter (TFF), and its products are applied in optical communications, industrial lasers, medical optics, consumer electronics and other fields.
In the field of optical communications, TFF ultra-narrowband thin film filter is the core optical component for wavelength selection and signal multiplexing. Its value will increase in 400G, 800G and even future 1.6T optical modules.
The market linked it with CPO and AI computing power optical interconnection, thus giving it extremely high imagination space.
But the problem is that Landun Optoelectronics' main business itself covers environmental monitoring, traffic management, military radar and other businesses, and its synergy with optical communications is not strong.
Whether the acquisition of the controlling stake of Lanchuang Technology can be completed smoothly, whether the transaction consideration is reasonable, and what the subsequent integration effect will be, none of these have been finalized. In other words, the stock price has risen by 148% first, but the company's fundamentals have not changed by 148%.
This huge gap between the increase and the fundamentals is the core to understanding the phenomenon of Landun Optoelectronics.
From a financial perspective, the consecutive daily limit of Landun Optoelectronics is the result of the superposition of three factors: information asymmetry, liquidity premium and positive thematic feedback. The restructuring after trading suspension brings information asymmetry, and a small number of funds may judge the transaction value earlier and lay out in advance.
The company's tradable share capital is small, and the chips are locked after resumption of trading, so a small amount of capital can drive consecutive daily limit.
Once it forms the market label of "optical communications restructuring monster stock", it will attract more capital chasing the rise. The more the stock price rises, the more real the story seems.
This positive feedback mechanism can strengthen itself in the short term, but it is extremely unstable.
The key supervision of the Shenzhen Stock Exchange is a cooling signal issued by the regulatory authority for severe abnormal fluctuations. In history, most monster stocks that were named by the exchange for severe abnormal fluctuations will experience huge shocks at high levels or even consecutive limit down afterwards.
Because once the regulator intervenes, market sentiment will reverse rapidly, positive feedback will turn into negative feedback, capital chasing high will flee one after another, and liquidity will dry up instantly.
Besides, today when the registration system has been fully implemented, why is the speculation on restructuring still so fierce? The reason is not complicated. Under the registration system, the pressure of delisting has increased, and small-cap companies have more incentives to transform through restructuring to "extend their lives by changing shells".
This is not that the market has become more speculative, but that under the institutional environment, poor-performing small-cap stocks have stronger incentives to survive.
But restructuring does not equal success, let alone performance realization.
For ordinary investors, the biggest risk of participating in stocks like Landun Optoelectronics is not that they cannot buy it, but that they are prone to cognitive dislocation: you think you are investing in the optical communications industry, but in fact you are acting as a liquidity provider in other people's game.
From the overall market perspective, Landun Optoelectronics represents the extreme performance of thematic speculation and restructuring narrative.
It and the industrial trend investment represented by Eoptolink and TFC form the two most distinct clues of this week's market. The coexistence of these two clues further confirms the stratification of market liquidity.
Institutional funds are chasing leading optical interconnection stocks with performance support, while hot money and retail investors are looking for short-term huge profit opportunities in restructuring themes.
The two logics run in parallel without merging with each other.
Pharmaceutical Stocks Dominate the Gain List, Institutional Funds Have Not Confirmed the New Main Line
It is worth noting that among the top ten stocks with the largest gains this week, 5 are from the pharmaceutical and biological industry.
The collective activity of pharmaceutical stocks is another phenomenon in this week's market worthy of in-depth analysis.
It is neither as full of speculative color as Landun Optoelectronics, nor as massively flowed into by institutional funds as CPO, it is in a more subtle position.
From the perspective of news, the pharmaceutical sector seems to be warming up.
But a detail has been ignored by many people: the top three industries with net inflow of main capital this week are communications, power equipment, and food and beverage, and the pharmaceutical and biological industry is not in the forefront.
In other words, the rise of pharmaceutical stocks is more driven by hot money, retail investors and some short-term funds, and institutional main funds have not followed up on a large scale.
This detail is very critical. In the A-share market, a sustainable sector market usually needs the confirmation of institutional funds.
If only hot money and retail investors participate, the sustainability of the market is often poor, and the fluctuation will be more intense.
The logic of this round of pharmaceutical rebound mainly includes four aspects: the previous decline was large enough, and the valuation is at a historically low level; the expectation of the Federal Reserve cutting interest rates has heated up, which is good for innovative drug financing and valuation; the domestic innovative drug policy environment has improved marginally; the expectation of overseas orders in the CRO industry is warming up.
CRO refers to pharmaceutical research and development outsourcing services. In the past few years, affected by the downward trend of global biomedical investment and financing, the industry growth rate has slowed down and the valuation has been greatly compressed. What the market is trading now is the expectation of warming up of investment and financing. If the subsequent order data and financing data are not realized, the sustainability of the rebound will be reduced.
Therefore, a more accurate positioning of the pharmaceutical sector this week is an oversold rebound under the improvement of low-level and policy expectations, rather than a new main line that has been confirmed by institutional funds.
This does not mean that there are no opportunities in the pharmaceutical sector.
On the contrary, if the AI chain adjusts due to crowding, the pharmaceutical sector, as a low-level sector, is likely to take over part of the outflow capital.
But at the current point in time, it is more like an alternative option, not the main attack direction of the market.
From another perspective, the activity of pharmaceutical stocks also reflects a current feature of the market: capital is looking for relatively low-level directions with logic but not fully priced. The AI chain has risen a lot, and some capital begins to fear high levels, hoping to find new breakthroughs. The pharmaceutical sector, due to its large decline, low valuation and marginal policy improvement, naturally enters the vision of some funds.
But the key to the success of this "switch between high and low" lies in the cooperation of fundamentals. If there is no substantial performance improvement or order data afterwards, the rebound of the pharmaceutical sector is only sentiment repair, and it is difficult to form a trend.
At the macro level, this week