Defensive holdings loosen as the market awaits stabilization after the policy bottom

Why has market support not yet driven the market higher?

On 3 November, the indices opened lower across the board and then fluctuated widely, with full-day trading volume down from the previous day. The report observed that market-support funds continued to stabilize the market through broad-market ETFs, but quantitative funds and natural buying showed little follow-through, leaving the indices supported but unable to rise.
The report says that if the previous trading day is defined as the policy bottom, a market bottom is still likely to follow; it judges, however, that the interval between the two is usually not very long.

The banking sector recovered much of its losses in the afternoon after falling sharply in early trading, but the report says the long lower shadow at elevated levels also shows that holdings are not sufficiently stable. Meanwhile, some funds have begun looking for lower-priced dividend stocks to catch up, and defensive capital may shift to different vehicles.
The leading status of the robotics theme is being challenged. The report judges that if strong capital does not return the next day, expectations for a second rally in the sector will fall significantly and the market may return to rotation.
AI applications, major financial stocks and consumer stocks, which were relatively strong the previous day, all saw mixed performance. Funds flowed in many directions, making the sustainability of those moves difficult to gauge; the report considers consumer stocks relatively more resilient.

The report is watching the market’s reaction after Qingdao Food’s consecutive limit-up streak ended: several high-flying stocks whose streaks had previously ended did not immediately plunge in a straight line, leaving a buffer even when they subsequently weakened. If Qingdao Food cannot maintain that pattern, short-term sentiment may cool.
In company coverage, Yunnan Germanium and AOI signed a long-term agreement for a total of 900 thousand indium phosphide substrates from 2027 to 2031, locking in volume rather than price. The contract value for 2027 is 194 million US dollars, approximately 122.46% of the company’s 2025 revenue.
The ability to fulfill the agreement depends on capacity expansion: the company currently has annual capacity of 150 thousand substrates. A project launched in April 2026 plans to add annual capacity of 300 thousand substrates within 18 months, eventually reaching 450 thousand substrates.