Summary of Key Points
Since 2025, China's ChiNext and STAR Market have led the global rise driven by AI, but they began to experience significant corrections in late June. The reasons for these corrections are partly global (excessive profits at the upstream AI level squeezing downstream companies, and South Korea's deleveraging efforts) and partly specific to China (the upcoming listing of ChangXin Memory, which triggered market risk aversion). The ChiNext market suffered more severely (non-core storage companies were hit hard), while the STAR Market was relatively resilient (semiconductor equipment and manufacturing companies, which are suppliers to ChangXin, fared better). Current market sentiment is at an all-time low, with trading volumes plummeting. There is significant disagreement about ChangXin's future market value after its listing, but most of the potential bubble has already been deflated.
I. Why Did the Tech Sector Suddenly Sputter Out? Global and Chinese Factors Both Contributed
The tech sector's decline was not caused by a single factor:
- Global Issues: The upstream AI industry (semiconductor hardware) is reaping most of the profits, leaving downstream companies (such as Apple) with little profit. This has raised concerns about the long-term profitability of AI investments. Additionally, South Korea's deleveraging efforts have led to a withdrawal of funds from tech stocks, causing global tech indices to fall.
- Chinese-Specific Issues: The upcoming listing of ChangXin Memory is a major factor. As a giant in the industry, there are fears that it will draw a large amount of capital from the market, prompting investors to sell their shares as a precaution. It's similar to how small businesses wait and see before a larger supermarket opens, hoping for less competition.
II. Why Does ChangXin's Listing Have Such a Significant Impact on the Market? Historical Patterns and Supply Chain Disruptions
ChangXin's listing has caused market tension for two main reasons:
1. Historical Precedents: Giant IPOs often occur at the peak of a bull market, leading to capital outflows before the company goes public. There are fears that history may repeat itself.
2. Supply Chain Disruption: As a leading memory manufacturer, ChangXin will have access to substantial funds for expansion, which could impact existing storage companies (especially those in the ChiNext market). These companies, which previously relied on rising inventory prices for profits, see their valuations plummeted (for example, Demingli has experienced six consecutive daily limit-downs).
Trading volumes have hit a record low, indicating that investors are holding their breath waiting to see how ChangXin's listing will affect the market.
III. Why Did the ChiNext Market Fare Worse Than the STAR Market? Differences in Sector Composition
Both the ChiNext and STAR Markets are tech sectors, but their responses were different:
- ChiNext: Many companies on the ChiNext are peripheral players in the storage industry (such as Demingli, which produces storage control chips), not core manufacturers. With ChangXin's listing, these companies lost their speculative value, leading to a sharp decline in the ChiNext index (21.4%).
- STAR Market: The STAR Market focuses on supporting early-stage industries such as semiconductor equipment and manufacturing. These companies are suppliers to ChangXin, so they are less affected by ChangXin's expansion plans. In fact, the semiconductor equipment sector even saw a 2.3% increase. Essentially, the STAR Market consists of companies that benefit from ChangXin's growth.
IV. Why Are Semiconductor Equipment and Manufacturing Companies Resilient on the STAR Market?
The resilience of the semiconductor equipment and manufacturing sectors can be explained simply: These companies will directly benefit from ChangXin's expansion plans. For example, if ChangXin builds new factories, it will need to purchase advanced equipment like lithography machines and etching tools, increasing demand for these products. Historical data shows that even if the storage sector does not perform well, the equipment sector can still grow, as storage companies always need to upgrade their facilities.
V. What Is the Market Waiting For Now? Divided Opinions Amidst Pessimism
Market sentiment is at an all-time low, with trading volumes at just 1.94 trillion (32% below the 20-day average). Everyone is waiting to see how ChangXin's listing will affect the market:
- Differences in Expectations: Some previously predicted a market value of 5 trillion for ChangXin after its listing, but now most believe 3 trillion is more realistic. Only 35% of investors still expect a valuation above 3 trillion, indicating that most of the potential bubble has been deflated.
- Hope for a Positive Outcome: If ChangXin's listing price is moderate (around 3 trillion), it will not draw too much capital from the market at once, allowing related companies (such as equipment manufacturers) to continue growing. This could be positive for the overall market.
In summary, ChangXin's listing is not necessarily a disaster. The market has already absorbed most of the potential negative impact, and we are just waiting to see how things develop tomorrow.