GF Securities: A-Share Tech Sector Correction Already Sufficient, Second "Decisive Moment" Approaching
Claire Weston
GF Securities argues the tech sector has fallen over 20% since late June, making the correction largely sufficient in magnitude — the current level marks the second strategic entry window of 2026, though intra-sector divergence is just beginning.
Down 20% — is the correction done?
The ChiNext and STAR 50 indices have each dropped more than 20% since late June, driven by a dual liquidity squeeze — both domestic and overseas funding conditions tightened simultaneously.
GF Securities benchmarked the drawdown against past core-industry correction cycles in both A-shares and US equities, and concluded that the magnitude of the pullback is broadly sufficient.
However, the duration of the correction still falls slightly short of historical precedents. This means → the price decline may be adequate, but the market may need more time to consolidate.
What is the money doing?
This week's inflows into broad-based ETFs and institutional capital reached the second-highest level since the "9/24" rally, trailing only the April 2025 tariff-shock period.
In plain terms = big money is buying the dip — this is the second-strongest pace of inflows in nearly a year.
GF Securities views this as a key signal supporting its call that the second "decisive moment" is at hand.
Has the AI cycle peaked?
GF Securities identifies two empirical thresholds for a boom inflection: growth decelerating below 30%, or growth retracing more than 50% from its peak — once either is hit, market performance deteriorates sharply.
Current AI penetration remains low and capital expenditure (CAPEX — the hard dollars companies are pouring into AI infrastructure) continues to ramp, meaning neither threshold has been breached.
This means → the AI industry is still in mid-cycle, not at a bubble top.
Can you still bet on the whole sector?
GF Securities cautions that differences in supply-demand dynamics and technology moats will most likely drive divergence across AI sub-segments.
In plain terms = not every tech stock will rally — the logic of simply "buying the sector" is breaking down, and what matters next is individual names and specific sub-chains.
The upcoming earnings season is the critical checkpoint: the data will separate the segments with real profits from those running on narrative alone.
Where are the risks?
Geopolitical conflicts exceeding expectations could push global inflation higher and weigh on risk appetite.
Persistent overseas inflation and US economic resilience could pull global liquidity into a tighter cycle sooner. This means → if the Fed delays rate cuts or turns hawkish, the liquidity tailwind behind A-share tech weakens.
This reflects a deeper point: the core premise of the call — "the AI boom has not peaked" — itself requires ongoing validation from subsequent data.
Content is for reference only, not financial advice.