Index Pullback Exceeds 20%! Oversold Technology Stocks Appear

Multiple institutions remain optimistic about the steady upward trend.

Today (March 24), major indices rebounded sharply, with the Shanghai Composite Index closing up 1.78%, approaching 3,900 points; the STAR Market 50 Index surged 2.33%, nearing 1,300 points.

Will today’s strong rebound mark the beginning of a new rally? Industry experts analyze that launching a new market cycle typically requires three key elements: an oversold market environment, ample capital inflows, and reasonable valuation levels.

Data shows that recent deep adjustments have brought some indices close to their maximum decline during this correction, indicating that the adjustment space is nearly exhausted and the conditions for a rebound are preliminarily in place.

Meanwhile, the valuation levels of the STAR Market and ChiNext indices have fallen back to relatively low levels, further enhancing market safety margins.

STAR 50 Index Falls Over 20%

Since the “September 24 rally,” the Shanghai Composite Index has experienced multiple short-term corrections exceeding 10%. Recently, it retreated from above 4,197 points to below 3,800 points, a decline of 9.6%.

The adjustment of the STAR 50 Index has approached its maximum, falling from 1,575.45 points to 1,249.01 points, with a maximum drop of 20.72%, exceeding the largest decline from October to December 2025, and slightly below the maximum decline from February to April 2025.

Additionally, from a valuation perspective, the price-to-earnings ratio (P/E) of the ChiNext Index has also fallen to relatively low levels. According to consensus forecasts of 2026 net profits, the P/E ratio of the ChiNext Index is around 27 times; for the STAR 50 Index, based on 2026 net profit forecasts, the P/E is about 55 times; and based on 2027 forecasts, approximately 40 times.

Institutions Favor These Sectors

What do institutions think now? China International Capital Corporation (CICC) states that in the short term, the development direction of international conflicts remains highly uncertain. On March 18, the central bank emphasized maintaining stability in the stock, bond, and foreign exchange markets. In the medium term, China’s new economy remains stable and improving, the old economy is clearing out positively, and the structural slow bull market in capital markets continues. External shocks may also present better allocation opportunities.

Guoxin Securities believes that this market correction is a normal adjustment in the late stage of a bull market, and external disturbances are merely amplifiers, not triggers for a bull-bear switch. Investors should avoid losing sight of the medium- and long-term direction due to short-term panic. History shows that major pullbacks in a bull market usually follow a pattern of “sharp decline—rebound—bottoming out,” and reaching new highs takes time to digest pressure. This adjustment period is often a good opportunity for gradual deployment.

The firm suggests that, although disturbances may not be immediately eliminated, there is no need for blind pessimism. Currently, short-term shocks do not change the overall bullish atmosphere. Investors should closely monitor developments in Iran and the scope of impact, gradually positioning for the second half of the bull market. In terms of style, during short-term volatility, market preferences may rebalance, with some undervalued “old economy” assets gaining temporary favor. In the medium term, sectors representing economic transformation and security—such as artificial intelligence, advanced manufacturing, and strategic resources—remain core allocation areas. These sectors are supported by real industrial policies and fundamentals, and after adjustments, are more likely to lead the market to a new rally.

High-Quality Oversold Tech Stocks Emerge

If a slow bull market is expected, where will the market focus?

In recent years, the structural differentiation of the A-share market has become increasingly evident. Data reveals an intriguing phenomenon: since April 8, 2025, over a thousand stocks have remained in a downtrend, meaning some investors who bought near 3,000 points are now trapped at high levels around 3,800 points.

Overall, the main narratives in the current A-share market still revolve around three themes—AI-driven hard technology, resource stocks, and high-dividend assets. Among these, the high prosperity of the AI industry is undoubtedly the market’s focal point. The significant rebound of related sectors on March 24 further confirms that funds are optimistic about this direction.

High-quality tech stocks that have experienced substantial price corrections may outperform the market in the future. According to data from Securities Times and Data Treasure, among stocks rated by five or more institutions and with recent prices down over 20% from the year’s high, 28 tech-related stocks have median net profits in their 2025 annual reports, interim reports, or forecasts that are over 50% higher than the previous year, with predicted 2026 P/E ratios below 60.

The stock with the lowest predicted P/E ratio is Industrial Fuzhou (601138), at less than 16 times. Cinda Securities notes that Industrial Fuzhou continues to benefit from the global AI computing infrastructure cycle, with clear advantages in server system integration and large-scale manufacturing; as demand for AI servers and high-speed network equipment continues to grow, the company’s future growth potential remains broad.

Xianhui Technology and Mingyang Smart Energy (601615) both have predicted P/E ratios below 20 times. Aijian Securities states that considering the promising prospects of new energy vehicles and energy storage, the demand for structural components and equipment is robust. Xianhui Technology is developing new structural components and expanding into high-margin overseas markets, which could boost profits. The company’s layout in solid-state battery dry-process roll presses and line equipment offers significant growth potential.

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(Edited by: Zhang Yang HN080)

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