Hexun Investment Advisor Li Cong: Funds are cashing out due to risk aversion; large investors are optimistic about the future.

On March 26, Hexun Investment Advisor Li Cong stated that after a two-day rebound in the global markets, today’s A-shares showed divergence. Previously, he analyzed the differences between the Shanghai Composite and the ChiNext, and here he emphasizes again that the Shanghai Composite faces resistance from a gap above and needs to retest, with high uncertainty over the weekend. For risk aversion, funds are seeking to cash out today. However, the Shanghai Composite has difficulty breaking below its previous lows and may be forming a complex bottom here. With the index underperforming, bullish institutions are not fully deploying, and the collective sentiment provides room for survival. Aside from a few K-line patterns caused by external disturbances in early March and Tuesday, the past three months have been sideways, differing from the Shanghai’s pattern. Previously, it was mentioned that the Shanghai’s rebound potential is limited, while the ChiNext still has some room, which can also be seen from yesterday’s gap, hence “Yi Zhongtian” showed some activity this morning. The ChiNext represents aggressive growth, with technology and new energy weights, and three months of sideways movement indicate that large funds are optimistic about the future. Once external disturbances ease and market volume and sentiment recover, a breakout is expected. In the short term, the ChiNext remains sideways. Currently, sentiment-driven themes and index-following institutions have driven the market today; collective action provides certainty, and previous momentum-based strategies should not be applied. Other sentiment themes, such as domestic computing power from a few days ago and aerospace-related topics from yesterday, have not gained market recognition, as they cannot compete with the power sector.

(Edited by: Zhao Yanping HF094)

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