ETF Leads the Counterattack: A Change in the Vanguard

"Technology must take the lead, and technological innovation is the only way to go."

On Friday, technology stocks, led by chip stocks, completely ignited the market, with the Double Innovation theme ETF sweeping the field.

The familiar bull is back again!

Old friends, the rhythm of this bull market, you can't guess it, you just can't guess it.

On Thursday, the Shanghai Composite Index broke below 3200 points, just about to doubt life, and the next day the technology stocks detonated the Hong Kong and A-shares, with the transaction volume soaring directly to 2 trillion.

But unlike last time, this time it was the technology sector, led by chip stocks, that took the lead in charging. The index tracked by the Chip Industry ETF (159310) strongly hit the board in the afternoon, completely detonating the entire market. The "bull market flag bearer" then counterattacked, with the index tracked by the Securities ETF (159841) closing up 6.88% for the day.

Starting from October 9th, the market began two consecutive weeks of adjustment.

If this round is a bull market, according to historical experience, there should be a main line that emerges through fluctuations, and it is often related to a new round of major industries.

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Such as the exuberant sector in 2009, the mobile internet wave in 2015, and the new energy track stocks in 2021.What will it be this time?

After a tough two-week wait, a counterattack finally arrived, with chip stocks leading the charge. On Friday afternoon, chip industry ETFs such as 159310 and several other semiconductor industry ETFs directly triggered a wave of price limits.

What's the reason?

Here, four reasons have been identified:

1. The domestic substitution of semiconductors is an inevitable trend. This week, Intel was exposed to cybersecurity risks, further increasing the attention on technological self-reliance and strength.

2. TSMC's Q3 performance and Q4 guidance both exceeded expectations. Combined with NVIDIA CEO Huang Renxun's previous statement that the demand for Blackwell chips is strong, it confirms that the semiconductor industry is still in a high prosperity period.

3. The performance of domestic semiconductor companies in the third quarter is also eye-catching. Among the 17 semiconductor companies that have currently announced their Q3 performance forecasts, 11 have year-on-year growth, with an overall good news ratio close to 90%.

4. The fourth quarter is the traditional peak season for consumer electronics. Android phones led by Huawei are ushering in a new wave of new machines, and Apple is releasing the iPhone 16 series, which is fully compatible with Apple Intelligence. The industry is optimistic that under the promotion of the Double 11 shopping festival, consumers' willingness to upgrade their phones will increase.

That being said, some investors couldn't hold on. On Thursday, they saw the Shanghai Composite Index close with a barefoot bearish line and immediately chose to cut their losses and wait and see. As a result, on Friday, they were seen wailing in the group:

"I sold all my sci-tech stocks yesterday.""I was originally thinking of leaving the market to take a look, and then buy back when the price is lower."

This is why everyone always says: bull markets are actually easier to lose money. Because bull markets have more sharp rises and falls, and the more trading times, the easier it is to step out of rhythm.

"When lightning strikes, you'd better be on the scene."

The reason why ETFs can stand out in this round of epic market, especially the 20CM ChiNext and STAR Market related ETFs are crazy "absorbing money", such as the fund shares of Chuang 300 ETF (159836) have directly tripled from September 24th to now.

This is due to the natural attributes of index ETFs: always operating at high position - the proportion of ETFs invested in the constituent stocks and alternative constituent stocks of the target index is not less than 90% of the net value of the fund's assets.

Even if overseas institutions want to participate in this wave of market, the first choice is also the ETFs that track Chinese stock indices, because they can immediately get on the position.

After two weeks of shock and callback, from September 24th to now, the ETFs related to hard technology still have the highest increase, the index tracked by the chip industry ETF (159310) has a cumulative increase of 55%, the indices tracked by Shuang Chuang Longtou ETF (159603), cloud computing Shanghai-Hong Kong-Shenzhen ETF (517390), ChiNext ETF Tianhong (159977), securities ETF (159841), computer ETF (159998), and electronic ETF (159997) have also increased by more than 40%, and the index tracked by the robot ETF (159770) has increased by 28% during the same period. The specific increase is as shown in the figure below:

Funds are just looking at the high elasticity of hard technology. After the batch of "20CM" limit-up of Shuang Chuang class ETFs on September 30th and October 8th, the funds in the field cannot buy ETFs, so they buy the corresponding linked funds.

ETFs and corresponding linked funds look like fraternal twins, which one has more advantages?

ETFs invest in the constituent stocks of the target index, while ETF linked funds mainly invest in the target ETF.To put it simply, an ETF is something you can directly purchase through your stock account. For instance, if some investors are interested in Tianhong Fund, they can search for the aforementioned ETF code on various securities firm apps to view detailed information.

When purchasing a linked fund, you give your money to the fund manager, who then buys the corresponding ETF on your behalf. Essentially, this adds an intermediary role.

What's different is that, to cope with redemptions, ETF linked funds must set aside no less than 5% of highly liquid assets and invest no less than 90% of the fund's net assets in the target ETF.

Investors without a stock account can search for Tianhong Fund on the Alipay app and select the ETF linked fund for the investment variety they wish to invest in. Tianhong's index fund series offers a comprehensive range of products with low fees, making it quite convenient to switch in the face of recent market volatility.

In a bull market with significant fluctuations, everyone must remember: risk and return come from the same source.