On the eighth, semiconductor-related sectors continued to modify. As of the shut of buying and selling on that day, the Sci-Tech Innovation 50 Index, the ChiNext Index, and the Communication Equipment Index fell by roughly 4.30%, 3.69%, and three.61% respectively. Combined with the efficiency on Friday (the fifth), many technology-related indices confirmed apparent changes.
During the two buying and selling days on the fifth and eighth, the cumulative returns of many technology-themed funds have retreated by greater than 10%. Among them are Huatai-PineBridge China-South Korea Semiconductor ETF, Cathay Science and Technology Chip Design ETF, and Cathay Integrated Circuit ETF.
The web worth of many ETFs retreated by greater than 10% in two buying and selling days
Before the opening of the A-share market on the eighth, the inventory markets in Japan and South Korea had already declined. As of the shut of buying and selling on that day, the Nikkei 225 Index closed down 3.85%, at 64,024.60 factors; the South Korean KOSPI Index closed down 8.29%, at 7,484.41 factors. The heavyweight shares Samsung Electronics and SK Hynix in the South Korean inventory market each declined considerably, with the declines on that day being roughly 10.18% and seven.68% respectively.
Before that, the U.S. inventory market had already declined considerably. As of the shut of the U.S. inventory market in the early morning of the sixth Beijing time, the Dow Jones Index, the S&P 500 Index, and the Nasdaq Index fell by 1.35%, 2.64%, and 4.18% respectively. On that day, chip shares declined extra considerably. The Philadelphia Semiconductor Index fell 10.26%. The inventory costs of particular person shares akin to Marvell Technology, Micron Technology, ARM, Intel, Qualcomm, and AMD all fell by greater than 10%.
On the eighth, the Chinese expertise sector adjusted once more. In the A-share market, as of the shut of buying and selling on that day, the Sci-Tech Innovation 50 Index, the ChiNext Index, and the Communication Equipment Index fell by roughly 4.30%, 3.69%, and three.61% respectively. In the Hong Kong inventory market, as of the shut of buying and selling on that day, the Hang Seng Tech Index fell 2.71%. The inventory costs of GigaDevice Semiconductor and MINIMAX-W fell by roughly 3.87% and eight.14% respectively.
The steady corrections on the fifth and eighth led to an apparent retreat in the returns of many technology-themed public funds. The web values of many ETF merchandise have cumulatively declined by greater than 10%. On the eighth, the Huatai-PineBridge China-South Korea Semiconductor ETF fell 6.45%. Adding the decline of 5.99% on the fifth, the web worth of the fund has cumulatively retreated by roughly 12.05% in two days. However, the secondary market value of this fund nonetheless maintains a comparatively excessive premium charge.
On the fifth and eighth, the Cathay Science and Technology Chip Design ETF fell by roughly 4.60% and 5.73% respectively, and the web worth of the fund has cumulatively retreated by roughly 10.06%; the Guolian’an Science and Technology Chip Design ETF fell by roughly 4.74% and 5.54% respectively, and the web worth of the fund has cumulatively retreated by roughly 10.02%; the Cathay Integrated Circuit ETF fell by roughly 5.07% and 5.30% respectively, and the web worth of the fund has cumulatively retreated by roughly 10.11%. In the previous two days, the web values of many different ETF merchandise have cumulatively retreated by greater than 9%.
Institutions: Caused by exterior disturbances
Regarding the inventory market correction, the market believes that it’s associated to the sturdy efficiency of the U.S. non-farm payroll knowledge, which has led to a rise in the expectation of the Federal Reserve to increase rates of interest.
China Europe Asset Management analyzed to Jwview that the direct set off for the market adjustment on the eighth was primarily exterior disturbances. The U.S. non-farm payroll knowledge for May was higher than anticipated, and the market repriced the Federal Reserve’s rate of interest hike path for the 12 months. Global danger belongings had been usually underneath stress; the scenario in the Middle East grew to become tense once more. Iran and Israel attacked one another, and delivery in the Strait of Hormuz was disrupted. Concerns about international vitality and provide chain safety elevated, additional elevating the market’s danger aversion sentiment.
Huijun, the fund supervisor of the Shanghai Bank Digital Economy Hybrid Initiated Fund, advised Jwview that the current correction in the semiconductor sector was straight triggered by abroad elements: the U.S. non-farm payroll knowledge led to a rise in the expectation of the Federal Reserve to increase rates of interest, and the market repriced the Federal Reserve’s hawkish path. The rise in long-term rates of interest suppressed high-valued sectors akin to AI. The cooling of abroad capital expenditure expectations was rapidly transmitted via the gear and supplies sectors, and sectors akin to the Sci-Tech Innovation 50 Index weakened synchronously.
Huijun mentioned that at a deeper stage, the market’s considerations about the sustainability of AI capital expenditure have fermented. Funds have rotated from {hardware} to the software finish. Semiconductors, which led in beneficial properties and had concentrated institutional holdings in the early stage, have turn out to be the first alternative for profit-taking. Both margin buying and selling purchases and over-allocation by funds in the sector are at historic highs. The crowded chips have magnified the adjustment vary; coupled with the concentrated shareholding reductions of many main corporations and single-batch cash-outs of over 10 billion, the promoting stress has been additional elevated. However, this spherical of adjustment is extra biased in direction of the emotional and valuation ranges, and the logic of home substitution and the achievement of gear and supplies orders haven’t been falsified.
Some establishments imagine that pushed by this spherical of “technology bull market”, the valuations of the Sino-US AI sectors are each at historic highs.
Galaxy Fund advised Jwview that from the perspective of knowledge and historic comparability, the valuation and development of the abroad semiconductor sector (represented by the Philadelphia Semiconductor Index in the U.S. inventory market) are certainly at a comparatively excessive stage. According to Wind knowledge, from April 1, 2026, to May 6, 2026, the Philadelphia Semiconductor Index had a rally of greater than 50% in 25 buying and selling days. This slope set a brand new document since March 9, 2000, and the index has deviated from its 2000-day transferring common by greater than 60%. In addition, the U.S. semiconductor sector additionally has excessive crowding and excessive valuation multiples at historic ranges.
CITIC Construction Investment Securities mentioned in a analysis report launched just lately that earlier than this correction, the U.S. S&P 500 Index had risen by roughly 15% in two months. A collection of fanaticism indicators had risen to ranges greater than historic ranges, approaching the peaks in 2000 and 2021. The slim width and excessive focus have fashioned an amplifier for the retreat.
Galaxy Fund mentioned that from the perspective of the Chinese home market, in accordance to Wind knowledge, the Shenwan Semiconductor Index is presently at a comparatively excessive valuation place in the previous decade. Its valuation logic is linked to abroad markets, nevertheless it additionally has distinctive home structural traits.
Galaxy Fund mentioned that in the Chinese semiconductor sector, sectors that straight reduce into the international AI computing energy provide chain (akin to optical module chips, superior packaging supplies, and computing energy chip design) or undertake China’s unbiased computing energy infrastructure building have had their valuations pulled up to historic highs underneath the abroad mapping. According to Wind knowledge, the Wind Optical Module (CPO) Concept Index, the Wind Advanced Packaging Concept Index, the Wind Chip Design Concept Index, and the Wind Computing Power Theme Index have all been above the sixtieth percentile in the previous decade.
The market adjustment might carry a reallocation window
Although the expertise sector has retreated considerably and quickly, some establishments nonetheless imagine that the semiconductor sector is engaging.
China Europe Asset Management believes that in the quick time period, the market has entered a typical phased adjustment window of “dual internal and external suppression + high crowding release”. However, it’s mandatory to clearly distinguish two ranges of logic at current: First, the better-than-expected U.S. non-farm payroll knowledge has reset the expectation of rate of interest cuts, which is an affect at the valuation stage. It has not modified the basic growth traits of the expertise trade chain, akin to the acceleration of AI computing energy capital expenditure, the enlargement of home storage manufacturing, and the improve in CCL costs; Second, the current strengthening of the regulation of “pure concept speculation” really constitutes a long-term profit for high-quality enterprises with actual efficiency assist and strong R & D funding. The market fashion will converge to “value growth”.
“The technology and cyclical sectors are the core driving forces for the improvement of China’s asset profitability. It is expected that this trend will continue to deepen. The technology and cyclical sectors can be continuously concerned. Therefore, the subsequent market adjustment may bring a reallocation window.” China Europe Asset Management steered that the structural highlights of China’s industries will be grasped, and the alternatives in the expertise, cyclical, and dividend sectors needs to be targeted on.
Specifically, China Europe Asset Management mentioned that in the expertise essential line, it’s mandatory to give attention to computing energy {hardware}, particularly storage, optical communication, and AI energy provide/liquid cooling and gasoline generators and different computing energy infrastructure supporting services that profit from the enlargement of AI demand however are nonetheless restricted by manufacturing capability, in addition to home computing energy that advantages from insurance policies and excessive prosperity; in the cyclical sector, listen to high-quality enterprises in China’s vitality and chemical trade with scale results, together with oil and gasoline, oil-based chemical trade, and coal chemical trade; in the dividend sector, listen to financial institution shares with restricted capital consumption and anticipated to keep excessive ROE and dividend charges, in addition to actual property shares that profit from the fast improve in trade supply-side focus.
Nuoyuan Fund advised Jwview that it’s steered to give attention to two essential strains: First, the AI and expertise sectors. The long-term growth logic of the trade is strong. This spherical of correction is generally due to capital reallocation and emotional disturbances. After a full adjustment, high-quality targets with technological benefits and realized efficiency are value steady monitoring; Second, defensive belongings. Dividend instructions akin to excessive dividends, banks, and public utilities turn out to be extra engaging in periods of elevated market volatility.
Huijun believes that the world will enter a interval of intensive verification of liquidity and danger desire in the subsequent two weeks. For instance, the itemizing of SpaceX might trigger a siphon impact; the path of the Federal Reserve’s rate of interest resolution continues to be unsure; the debate on “whether AI spending can deliver returns” continues to ferment. The window interval is a course of for high-level varieties to digest expectations and launch fluctuations. It is critical to distinguish between emotional and valuation corrections and reversals of industrial traits. The market response after the occasion is commonly extra indicative than the occasion itself.
This article is from the WeChat official account “Jwview” (ID: jwview). Author: Xue Yufei, Editor: Dong Wenbo. Republished by 36Kr with authorization.