Late-day volatility struck the market!

On September 19th, during the A-share late-day call auction period, several bull stocks experienced significant movements. Stocks like NEOPhotonics, ACCELINK Technologies, WuXi AppTec, and BEIGENE surged sharply, while China National Nuclear Power, China Unicom, and Wanhua Chemical saw notable declines.

Market analysts attribute these stock fluctuations to the implementation of FTSE China A50 index component adjustments. Previously, FTSE Russell announced quarterly review changes to the FTSE China A50 Index and FTSE China A150 Index, which officially took effect after market close on Friday, September 19th. Related index funds and institutional investors typically adjust their portfolios on the effective date, particularly before market close, leading to abnormal price movements in affected stocks.

**Multiple A-Share Stocks Show Late-Day Volatility**

On September 19th, major A-share indices traded sideways with reduced volume. At market close, the Shanghai Composite Index fell 0.30%, the Shenzhen Component Index dropped 0.04%, the ChiNext Index declined 0.16%, and the STAR 50 Index fell over 1%. Individual stocks showed more declines than advances with significant divergence. Lithography equipment, lithium mining, and construction machinery sectors strengthened, while PEEK materials, humanoid robots, and diversified financial sectors saw substantial corrections.

Notably, during the late-day call auction period, certain stocks experienced dramatic movements. ACCELINK Technologies surged from a 1.49% gain to 2.96%, while WuXi AppTec rallied from a 0.53% decline to a 1.23% increase. Additionally, NEOPhotonics and BEIGENE each jumped nearly 1 percentage point.

Conversely, China National Nuclear Power, China Unicom, and Wanhua Chemical plunged during the late-day call auction. China National Nuclear Power's share price dropped nearly 2 percentage points, while China Unicom and Wanhua Chemical each fell nearly 1 percentage point.

The primary driver behind these stock movements was the FTSE China A50 index component adjustment. On September 3rd, international index provider FTSE Russell announced quarterly review changes to the FTSE China 50, FTSE China A50, FTSE China A150, FTSE China A200, and FTSE China A400 indices, effective after market close on Friday, September 19th.

The closely watched FTSE China A50 index added NEOPhotonics, WuXi AppTec, ACCELINK Technologies, and BEIGENE to its components, while removing China National Nuclear Power, China Unicom, NARI Technology, and Wanhua Chemical. The reserve stock list includes China Minsheng Banking Corp, China Molybdenum, Flush, SAIC Motor, and SERES Group. The newly included components are all stocks that have seen significant market cap increases this year, while the removed companies experienced relative declines in market cap rankings or poor performance.

According to FTSE Russell's website, the A50 index covers the 50 largest stocks by market capitalization listed on Shanghai and Shenzhen exchanges, with quarterly reviews conducted in March, June, September, and December.

Industry professionals note that FTSE Russell indices serve as tracking benchmarks for numerous global index funds. When a stock is included in an index, funds with "index replication" objectives must purchase the stock around the effective date to adjust their portfolios.

**Some Hong Kong Stocks Show Late-Day Volatility**

Today, several Hong Kong stocks also exhibited late-day volatility. 4Paradigm, CARsgen-B, SF Intra-city, Wei Long Mei Wei, and XtalPi Holdings showed notable gains. These stock movements are also related to FTSE index adjustments.

On September 5th, FTSE Russell updated its semi-annual adjustment list for the FTSE Global Equity Index Series (FTSE GEIS) for September, with changes taking effect after market close on September 19th.

The FTSE China Small Cap index newly included over 10 Hong Kong stocks, including AMBT-B, 4Paradigm, SF Intra-city, Health Road Holdings, 9F, RoboSense, Shanghai Pechoin, Gold Mountain Hong Kong, Wei Long Mei Wei, XtalPi Holdings, and Yixin Group.

Regarding Hong Kong stock performance on September 19th, major Hong Kong indices opened higher but gave back gains. The Hang Seng Tech Index rose as much as 1.5% intraday but closed with a narrowed gain of 0.37%. Individual stocks saw SenseTime, NIO, and Hua Hong Semiconductor rise over 4%, JD.com gain over 3%, and Lenovo Group advance nearly 1%.

Goldman Sachs Chief China Equity Strategist recently stated that driven by valuation and liquidity factors, Chinese equity markets may experience further prosperity. Therefore, Goldman Sachs maintains "overweight" ratings on both A-shares and H-shares, forecasting 12-month upside potential of 8% and 3% respectively, recommending increased positions on pullbacks. The firm favors themes including "China's Top 10 Private Enterprises," AI, "anti-involution," and shareholder returns.

CITIC Securities pointed out that A-shares entered a consolidation phase in September with gradually increasing volatility, while domestic and foreign capital attention to Hong Kong stocks is rising. Hong Kong stocks' advantages over A-shares are becoming more prominent in the coming period. The firm is bullish on overall Hong Kong stock performance and suggests focusing on core growth sectors, particularly internet, innovative pharmaceuticals, new consumption, and technology sectors, while also considering dividend-focused defensive allocations.