Tech "Big Counterattack," Ending Shanghai Index Four-Day Decline, How Far Can Volume-Contraction Rebound Go? | Sichuan Perspective Market Analysis

Sichuan Online Reporter Peng Yuheng

On March 18, the three major A-share indices all closed higher, ending the previous four-day losing streak of the Shanghai Composite. At the close, the Shanghai Composite rose 0.32%, to 4,062.98 points; the Shenzhen Component Index increased 1.05%, to 14,187.80 points; and the ChiNext Index gained 2.02%, to 3,346.37 points. Over 3,500 stocks in the market rose, but trading volume shrank, with total daily turnover of 2.06 trillion yuan, down 163.5 billion yuan from the previous trading day, hitting a new low this month. The volume-constrained rebound reflects that the market is still in a cautious recovery mood.

Today, the Shanghai Composite ended its four-day decline.

Why does each bottoming rebound always see technology leading the gains?

The market today showed a V-shaped bottoming and recovery, with a clear rally in the late trading session, and a significant reversal in capital flows.

Yesterday’s favored defensive sectors like insurance and banking gave way today to the growth-oriented technology sector. From the market performance, the main theme clearly points to the computing power industry chain, with storage chips, CPO, computing power leasing, and liquid cooling servers all actively trading. Notably, storage chips stood out, with Tongyou Technology and Shenke Da hitting 20% daily limit-ups, and Guanghe Technology and China Electronics Port also hitting the limit. In the CPO sector, Zhongbei Communication and Kechuan Technology hit daily limits, signaling a comprehensive rebound in the tech track. In terms of capital flow, major funds net inflows in the communication equipment sector reached 8.078 billion yuan, semiconductors 6.663 billion yuan, and communication services 3.378 billion yuan, ranking the top three among industry sectors.

The big tech sector has become the main driver of the rebound.

Behind this performance are substantive changes in industry fundamentals. The strength in storage chips is particularly noteworthy. According to news, SK Hynix revealed that current DRAM and NAND inventories only last about four weeks, making it difficult for cloud providers and consumer electronics to secure sufficient supply. Vivo recently adjusted the retail prices of some products, citing the ongoing sharp rise in global semiconductor and storage costs. The rise in semiconductor prices is accelerating toward end products, indicating that industry chain prosperity has moved from expectations to actual realization.

Why do certain sub-themes within the tech sector perform so well during recent market bottoms and rebounds?

Analysis suggests the core reasons are the high prosperity, strong policy support, and high flexibility of these industries.

From an industry perspective, AI computing power and semiconductors have high performance realization and clear application logic, making them the preferred sectors for capital to reallocate once market sentiment stabilizes. From a capital perspective, the tech sector is highly elastic and flexible; in a shrinking market, funds tend to concentrate their positions, and sub-themes within technology can easily lead the rally, becoming the main themes that drive market sentiment and lead rebounds. Additionally, frequent catalysts such as news events also serve as “igniters” for these sectors’ rebounds.

For example, today’s market saw CPO and computing power sectors experience concentrated sell-offs yesterday. Some short-term traders took advantage of positive news to sell, while long-term investors saw it as a rare opportunity to add positions. Under these intertwined logic, today’s market showed typical capital relay characteristics.

Can the volume-constrained rebound support a broad rally?

Today, the trading volume in both markets hit a new low for the month, sending multiple signals.

The current low volume indicates the market is still in early recovery. In previous rebounds, the next-day trading volume usually stayed between 2.27 trillion and 2.57 trillion yuan, but today it was only 2.06 trillion yuan, reflecting cautious investor sentiment. Industry insiders believe that “ground volume” during a rebound often signals limited short-term upward momentum.

On the other hand, intraday movements also confirm that the market’s bottom support remains effective. The Shanghai Composite initially dipped in the morning, but after three rebounds, it stabilized and rose again. The day closed with a candlestick featuring a lower shadow, forming a relatively solid lower boundary of a trading range at a key support level. This pattern indicates that the market has formed a consensus on the downside risk, and when approaching critical support levels, there is always active buying.

The overall A-share average stock price increased by 1.62%, significantly outperforming major indices, indicating that small- and mid-cap stocks are recovering faster than large-cap stocks. However, this recovery still lacks sufficient volume to evolve into a broad rally.

So, can the current profit-making effect continue?

External conditions still carry significant uncertainties. Tensions in the Middle East persist, with fluctuations in the Strait of Hormuz affecting global markets, causing sharp swings in gold and oil sectors. However, the A-share market’s response to such external shocks is becoming more “desensitized,” with decreasing interference. Shenwan Hongyuan Securities pointed out that the current pricing of geopolitical conflicts in A-shares is becoming more mature, allowing for comprehensive analysis based on short-, medium-, and long-term logic.

Internally, there are also positive catalysts. Today, at a press conference, Liu Xin, Deputy Minister of Science and Technology, said that the 2026 Zhongguancun Forum will feature special sessions on frontier fields such as 6G, brain-computer interfaces, and cell and gene therapy. Additionally, the National Development and Reform Commission announced a new batch of 13 landmark foreign investment projects with a planned investment of $13.4 billion. These projects mainly focus on manufacturing, including electronics manufacturing, chemicals, automobiles, and electrical machinery, accelerating industrial cluster development. These signals continue to reinforce policies supporting the technology and manufacturing sectors.

Year-end report season: where is the market heading?

Overall, institutions remain cautious about the near-term outlook. Caixin Securities believes that amid uncertain global energy supply and the upcoming intensive earnings disclosure period in China, broad fluctuations will remain the main market theme in the near future.

Guotai Junan Securities, Haitong Securities, and others also suggest that during the mid-March to April annual report window, the market will gradually shift back to fundamentals, with investors paying more attention to corporate intrinsic value rather than purely sentiment-driven speculation.

In short, focus on stocks with good earnings outlooks!

After hours, further positive news emerged—two major cloud providers announced price hikes on the same day. Alibaba Cloud announced that, due to exploding global AI demand and supply chain price increases, its AI computing power and storage products will see price increases of up to 34%. After market close, Baidu Smart Cloud also announced price adjustments, citing significant increases in core hardware and infrastructure costs, leading to structural price optimization for some products.

(Data sources: Wind, Tonghuashun iFinD, Eastmoney; opinions expressed are for reference only and do not constitute investment advice.)