New high → sharp decline → rebound, can you still buy the ChiNext Index in this round?

Over the past year, the ChiNext Index has delivered solid returns, with cumulative gains of more than 50%. It even hit a fresh near-3-year high last Monday, and the green shoots of returns have left many investors in a great mood. But almost immediately afterward, the ChiNext Index pulled back for a time as the situation in the Middle East escalated, the risk level in the Strait of Hormuz rose, and the global “stagflation trade” heated up. Then, just recently, the index rebounded again. This kind of roller-coaster market—“new highs—big drop—rebound”—has made many investors uneasy: should they sell or buy? Can the rebound last?

Chart: ChiNext Index performance over the past year

Source: Wind; statistical period 2025/03/26–2026/03/25.

I. Why did it suddenly drop so sharply? Fundamentally, this adjustment is emotional selling triggered by external shocks

What many investors worry about most is not the drop itself, but the fact that “it just made a new high a few days ago—why did it turn around and fall?” This time, the ChiNext was not simply “unable to rise further.” Instead, after setting a new high, it experienced a typical pullback driven by an external shock. Over the weekend, the U.S. and Iran both applied maximum pressure to each other, which further stoked market panic. As a result, oil prices surged quickly, and capital began to price in the stagflation logic in advance. On March 23, the number of A-share companies across the whole market that rose/closed flat/fell was 305/14/5172, and the market overall was compressing risk appetite.

II. Why did it start rebounding again? The market moved from “pricing the worst case” back to “repairing reality”

If March 23 was when the market was trading the worst expectations, then the rebound that began on March 24 was a correction to that excessive pessimism. As the U.S. side indicated that it might reach an agreement with Iran, the market’s way of playing out the conflict shifted from “complete loss of control” to “fighting while negotiating.” ​

It’s worth noting that the U.S.–Iran conflict has not shown clear signs of ending, so the market may continue to fluctuate as new statements come from both sides. In this situation, “tolerate short-term shocks to capture long-term gains” is likely a fairly good strategy. You can allocate to high-quality assets with stable long-term returns in undervalued valuation ranges, and you can also selectively add positions modestly during market panic windows.

III. Why could the ChiNext make new highs before? Can it still be bought now?

The ChiNext Index was able to post new highs previously because it is made up of a set of assets in today’s A-shares with strong growth momentum and that can relatively well represent new quality productive forces. These weighted industries have every reason, in the medium to long term, to maintain relatively high growth momentum.

The ChiNext Index is exposed fairly evenly across growth-oriented sectors. High-end manufacturing (power equipment, etc.) and TMT (communications, electronics, etc.) are both major components of its industry structure. Under the “computing-power and electricity coordination” framework, the energy storage, power equipment, and new-energy infrastructure—together with the optical module segment driven by AI computing power expansion—form the core main storyline.

Chart: Industry weight distribution of the ChiNext Index (Shenwan Level 1)

Source: Wind; as of 2026/03/25.

1. First, look at fundamentals: the weighted industries of the ChiNext Index are still in an uptrend cycle of growth momentum

The first main line: energy security and “computing-power and electricity coordination” reshaping the value of power assets

On one hand, the direction of the U.S.–Iran conflict is still unclear. Under geopolitical disruptions, the fragility of traditional energy supply chains has been laid bare, making long-term allocation value stand out for areas such as green electricity, energy storage, and grid equipment. On the other hand, electricity demand from AI data centers is rising rapidly, and the country has elevated “computing-power and electricity coordination” to an even higher strategic level—turning energy storage into a key piece of critical infrastructure in the AI era. In addition, with subsidy policies from governments across different countries, energy storage projects show strong profitability, and sector performance remains highly buoyant.

The second main line: AI computing power breakout driving demand for optical communications

Against the backdrop of a global surge in AI computing power demand, the optical communications sector continues to benefit. Training and inference for large AI models require thousands of GPU chips working in a coordinated cluster. These chips need high-speed, low-latency data exchange with each other—optical modules are the “blood vessels” connecting these chips.

At present, global optical module demand is accelerating from mainstream 400G to 800G, and even to 1.6T, creating a huge generation-upgrade gap. This provides predictable growth space for leading companies with advantages in high-end production capacity. Market enthusiasm for optical modules, in essence, is a vote of confidence in the long-term growth outlook for the AI industry.

2. Then, look at valuation: the ChiNext Index valuation remains in a relatively reasonable range

Many investors, the moment they see “new highs,” think “too expensive.” But this time, it isn’t a top driven by overvaluation. As of March 26, the ChiNext Index’s trailing one-year price-to-earnings ratio (PE) is about 40x, sitting around the 32nd percentile since the base period.

In other words, the recent strength of the ChiNext has been more of a reasonable re-rating supported by earnings and growth momentum, rather than a pure emotion-driven valuation jump disconnected from fundamentals. This suggests that the ChiNext Index still has some appeal for long-term allocations.

Looking ahead, A-shares are very likely to enter a phase of earnings digestion and valuation adjustment. Meanwhile, the weighted industries in the ChiNext Index, benefiting from industry trends, are expected to maintain solid earnings and growth momentum, offering medium- to long-term investment value. The E Fund ChiNext ETF (159915) tracks the ChiNext Index, covering major listed leaders in the optical module and energy storage segments. It is the largest ChiNext ETF by market scale in the domestic market, with the best liquidity and the lowest management fee rate. As of March 26, the latest fund size is 51.227 billion yuan, and the management fee rate is only 15 BP per year—making it a high-quality option for participating in ChiNext Index investment.

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