Shanghai Composite Index barely holds 3800 points! Has the real panic selling appeared?

On March 23, the market experienced a day of oscillation and adjustment, with the three major indices opening lower and falling more than 4% during the session. The Shanghai Composite Index barely held the 3,800-point level at the close. By the end of the day, the Shanghai Index fell 3.63%, the Shenzhen Component Index dropped 3.76%, and the ChiNext Index declined 3.49%.

In terms of sectors, the green energy concept stocks defied the trend and strengthened, space photovoltaic concepts surged amid volatility, and the coal sector performed actively. On the downside, precious metals concepts led the declines, and the tourism sector continued to adjust.

Over 5,100 stocks declined across the market, with 133 hitting the daily limit down. The combined trading volume of the Shanghai and Shenzhen markets reached 2.43 trillion yuan, an increase of 144.7 billion yuan compared to the previous trading day.

Although last week’s A-share market experienced what is called “double ice” and “triple ice,” today, an “unexpected” fourth ice episode occurred.

Let’s look at this set of indicators:

All major stock indices gapped down at the open and continued to decline. The Shanghai Index formed a “long bearish candle,” with a low of 3,794.68 points, breaking through last year’s “17 consecutive days of gains” starting point (3,818 points), and nearly breaching two integer levels.

Over 5,100 stocks declined, marking the third consecutive day of broad declines. The average stock price across all A-shares fell 5.09%, the largest single-day drop in recent times.

In the afternoon, the number of stocks hitting the limit down fluctuated and rose, reaching 133 by the close.

According to stock selection data, nearly 1,200 stocks closed below their intraday low on April 7 last year, meaning they are “white涨了” (a term indicating stocks that have risen but are now below their previous lows).

This indicates that the “most panic moment” mentioned in our previous forward-looking article has extended for another day, matching the streak of declines seen at the beginning of 2025.

Regarding the reasons for the market’s “accelerated bottoming,” some analysts believe that, based on the widespread decline in Asia-Pacific markets, Trump’s “48-hour final ultimatum” is about to expire, which in a sense has become a “Damocles sword” hanging over the capital markets.

As for strategies, on one hand, the “value betting” of holders who buy the dip is further increasing—although funds that bought the dip a few days ago are likely trapped. But left-side trading is always like this: only a few manage to precisely catch the bottom, while most inevitably become “friends of time.”

Meanwhile, current holders face greater pressure and tests. Some investors may choose to completely exit the stock market out of pain and fear; those who can “hold on” may have simply experienced the storm.

On the other hand, overall, the market still shows a weak downward trend, waiting for short-term risks to fully release and for signs of a bottom before considering further or more cautious entry.

Shenwan Hongyuan’s strategy team pointed out that the deadlock in US-Iran conflicts and continued risk aversion have kept risk appetite under pressure. They noted that the short-term withdrawal of funds supporting the “first-phase rally” (such as shrinking industry ETF sizes, pension fund reductions to avoid net asset losses, and de-risking and redemptions in “fixed income+” products) suggests that the current phase may already be the most stressful.

They stated that, for medium-term projections, they oppose the view that “short-term rapid decline, medium-term slow decline, and the big wave of rally has ended.” In the short term, the market may evolve through a process of “oversold → stabilization and policy support → rebound.” In the medium term, the A-share market is in a “two-phase rally” with a period of consolidation.

“Subsequently, the market will continue to fluctuate within a range, with leading sectors rotating. During phases with new opportunities (such as short-term energy storage and optical communications driven by economic recovery), the market may challenge the upper limit of the range; if the rebound stalls and leading sectors face resistance, the market could test the lower boundary of the range.”

Guotai Haitong Securities stated that recent geopolitical instability has caused concern among many investors. However, they believe that geopolitical impacts on A-shares are short-term and not profound. China’s market and asset logic have advantages and are differentiated. Globally, A-shares have consistently experienced smaller declines, and the long-term trend of A-shares is driven by their intrinsic core logic.

First, globally, China maintains a relatively stable geopolitical landscape, high energy self-sufficiency, a complete industrial system, and stable economic, social, and capital markets. This stability is rare worldwide and makes A-shares less susceptible to being solely driven by geopolitical risks.

Second, the growth logic is a breakthrough in breaking the narrative of global stagflation risks. 2025 will be the first year when Chinese listed tech companies turn positive on capital expenditure. The US-China computing power gap offers vast market potential, and tech capital spending is expected to accelerate. Meanwhile, the central government’s deployment of 800 billion yuan in new policy financial tools to stabilize investment and domestic demand is expected to mobilize significant social investment, further diversifying growth drivers for the A-share market.

In summary, we often say “confidence is more precious than gold.” During this period when even gold temporarily loses its safe-haven function and continues to weaken, more and more targets may quietly approach critical turning points—

Let’s wait and see when the turning point will occur.