On the second trading day of September, markets experienced another sharp single-day decline, with the recently leading computing power sector collectively retreating.

As of September 2nd close, A-share's three major indices declined synchronously. The Shanghai Composite Index fell slightly by 0.45% to close at 3,858.13 points, the Shenzhen Component Index dropped 2.14%, and the ChiNext Index led declines with a 2.85% fall. On September 3rd, the Shanghai Composite continued its retreat, closing down 1.16%, while the Shenzhen Component fell 0.65%, and the ChiNext rose 0.95%.

On September 2nd, despite modest index declines, the market's "money-losing effect" was significant, with over 4,000 A-share companies declining. From a sectoral perspective, optical modules saw substantial adjustments on September 2nd, making the computing power sector - which had experienced nearly two months of continuous short squeezes - a major area for profit-taking. Correspondingly, market discussions about whether the AI theme has peaked and how much further the rally can extend have been intense.

Regarding this, Huaxia Fund stated that "months of substantial gains and extremely active market conditions have accumulated significant profitable capital, which also implies certain risks. This week, incremental funds attracted by AI narratives have marginally weakened, and investor selling has led to index declines, which is essentially market mean reversion."

**CATL Remains the Top A-Share Holding for Public Funds**

The allocation to computing power sectors is also reflected in public funds' total holdings. According to Tianxiang Investment Consulting data, this year's highly popular innovative pharmaceuticals and computing power sectors both have individual stocks entering the rankings, such as Hengrui Medicine, Eoptolink, and Accelink Technologies.

According to Tianxiang Investment Consulting statistics, the 2025 fund interim reports show that A-share active equity funds' sector holdings data indicates the top ten heavy-weighted sectors account for 72.66% cumulatively, with only two sectors having allocations exceeding 10% each: electronics and pharmaceutical & biological, accounting for 17.76% and 11.48% respectively. Compared to end-2024 positions, power equipment and food & beverage proportions have declined, while other sectors have all increased.

In terms of individual stocks, from Tianxiang Investment Consulting's statistics on public fund clustering, CATL maintains the highest proportion at 2.36%, with Kweichow Moutai ranking second at 1.33%.

Consistent with the 2024 annual report, CATL, Kweichow Moutai, and Midea Group are also the top three individual stocks in public funds' top twenty A-share holdings. However, in terms of holding market value, all have declined significantly. CATL and Kweichow Moutai both exceeded 100 billion yuan in fund holdings in the 2024 annual report at 178.124 billion yuan and 142.748 billion yuan respectively, while this year's interim report shows fund holding market values of 57.489 billion yuan and 32.327 billion yuan respectively, indicating some loosening of clustering behavior.

The end-2024 top ten holdings list included Cambricon, which subsequently became a major bull stock in 2025, ranking 7th, while this year's interim report features Eoptolink and Accelink Technologies on the list. China Merchants Bank's ranking fell from 5th at year-end to 10th, while Zijin Mining rose from 12th last year to 4th in mid-2025, showing adjustments in fund allocation strategies.

The 2025 fund interim reports also show a significant growth characteristic in Hong Kong stock allocations, with heavy-weighted stock proportions growing rapidly.

CITIC Securities Financial Engineering research reports show that 2025 Hong Kong Stock Connect holdings significantly increased to 16.85%, replacing all A-share sectors to become the primary allocation direction for active equity funds, reflecting that against the backdrop of relatively high valuations for some A-share assets, Hong Kong stocks have become favored by capital due to their valuation advantages and scarce assets.

The report also summarized public funds' position adjustments, noting that while power equipment and new energy faced significant reduction, they remain among heavy holdings, indicating they are still core tracks. Using data statistics that exclude the impact of sector performance, Hong Kong Stock Connect and electronics received significant active additions, while power equipment & new energy, food & beverage, and home appliances became sectors with higher active reductions.

Behind this change is a clear market style shift: from past "traditional core assets" mainly featuring liquor and new energy to Hong Kong tech stocks, semiconductors, and AI-driven high-growth tracks.

Regarding recent market adjustments, Huaxia Fund personnel stated that investors can remain optimistic in the long term. Short-term declines are mainly due to trading risks and structural risk releases, and the market lacks the foundation for overall significant declines. Currently, except for a few technology tracks, A-share overall valuations still offer good value proposition.

Bosera Fund believes that looking ahead, overseas rate cut certainty is rising, China-US relations remain stable, while internal policies stay moderate and the RMB shows accelerating appreciation trends. Overall, internal and external macro environments still favor A-share equity markets, but attention should be paid to short-term evolution of some market endogenous factors, especially focusing on the game between profit-taking and chasing highs emotions, structural changes in incremental funds, and subtle changes in regulatory attitudes. Market offensive momentum may face variations.

**Veterans Remain "Cautious," Zhang Kun and Xiao Nan Not Pessimistic**

Looking ahead, how do battle-tested fund managers respond?

"Some think the bull market has just begun, I think greater challenges have just begun. For this fund, I will complete positioning within the specified time according to fund contract requirements," said Dacheng Fund manager Xu Yan. Recently, he faced questioning about missing opportunities, as his newly managed Dacheng Xingyuan Qihang fund's slow positioning attracted dissatisfaction from fund holders, which he also addressed in the 2025 interim report.

Xu Yan is an investment veteran who joined Dacheng Fund in 2007, left in 2018, and returned to Dacheng Fund in 2019. According to Tiantian Fund data, his current assets under management reach 19.367 billion yuan, with his best career return at 125.79%.

According to Tiantian Fund data, Xu Yan's Dacheng Xingyuan Qihang was established on March 11, 2025, with assets of 627 million yuan as of the interim report. The fund's interim report shows current stock holdings only include Autobio Diagnostics and Meituan, with holding proportions of 0.38% and 0.35% respectively, and cash proportion as high as 84.95%, indicating slow positioning progress.

Regarding market views, Xu Yan leans conservative and addressed bull market judgments in his interim report, stating: "The future may be steady improvement. Some say it's a bull market, which I don't understand. During the bull market years ago, there were still numerous undervalued company stocks, but now the environment has changed dramatically. However, as in the past, I hope to continue seeking undervalued company stocks while maintaining relatively low stock positions."

E Fund's Zhang Kun and Xiao Nan are relatively optimistic. Zhang Kun stated in E Fund Blue Chip Select's interim report: "The market currently maintains persistently pessimistic expectations for domestic demand, however we believe this view is quite questionable."

He noted that residents' improved income expectations and social security system improvements will change the situation where deposit growth exceeds income growth, rebuild domestic demand positive feedback, and consumer confidence indices will eventually emerge from current weakness. He also mentioned that holdings are mostly domestic demand-related assets, and while it's difficult to judge how long market pessimistic expectations will persist, he believes they lack foundation for long-term existence. Mr. Market's good prices provide opportunities for long-term investors to buy quality listed company equity at low valuations.

Xiao Nan also has considerable confidence in domestic demand.

He noted in E Fund Consumer Select's interim report: "Current A-share and Hong Kong stock premiums have reached historically low areas. After Hong Kong stocks led for over a year, A-shares have the potential to gradually emerge from the bottom in an improving liquidity environment, especially the long-depressed domestic demand sectors. We should maintain firm confidence in domestic demand. On one hand, our growth potential has not suffered fundamental damage; conversely, many areas have shown encouraging high-quality structural transformations."

Xie Zhiyu, whose performance ranks among the top this year, also expressed a degree of optimism. As of September 2nd net value settlement, his managed Xingquan Heyi has achieved a high annual return of 39.07%.

He stated in Xingquan Heyi's interim report that looking toward the second half, the economy faces certain structural pressures but doesn't change the overall positive trend. Anti-involution policies in key industries help break excessive market competition prisoner's dilemmas, boost overall price levels, and thereby improve corporate profitability. He also mentioned views on tariff negotiations, noting that markets have learning effects, tariff issue volatility ranges have significantly narrowed compared to early year, and are expected not to cause substantial negative impacts on the economy and stock market in the second half.