Positive news for innovative drugs!

Last night, US biotech stocks surged, with the Nasdaq Biotechnology Index jumping 6.4%, marking its largest single-day gain in six years. Moderna skyrocketed 176%, adding $44bn to its market cap overnight; Merck rose 13%, hitting its highest level since March 2009, and even Estée Lauder jumped 16%, setting a 14-year high.

The core driver behind this biotech rally is straightforward: preliminary Phase III results for the Moderna-Merck mRNA personalized cancer vaccine were released, confirming success in melanoma treatment. This highlights a key trait of innovative drugs: once R&D hits the market, earnings can explode. China's domestic innovation capabilities are also formidable, likely to drive related sectors higher.

Yesterday, A-shares suffered a broad sell-off across all major indices. The Shanghai Composite fell 2.4%, the Shenzhen Component plunged 5%, and the ChiNext/STAR Market crashed over 6%. Over 5,000 stocks declined, with the median change at -3.92% and more than 100 hitting the daily limit down. Trading volume hit ¥2.51 trillion, up ¥110.3 billion from the previous day, signaling a classic panic-driven stampede as capital fled.

This marks the first severe profit-erasing event since the current rebound, highlighting extreme divergence. Only defensive sectors like banks, coal, and oil bucked the trend. Previously hot growth tracks—semiconductors, MLCCs, robotics, optical modules, and AI hardware—all collapsed.

The intraday trend was bleak, opening lower and staying weak with no meaningful rebounds. Capital fled aggressively in the afternoon, showing zero resistance, making it one of the most grueling sessions recently.

Here are the four core reasons for yesterday's crash:

1. The US 30-year Treasury yield broke 5.3%, fueling global market panic;

2. Earnings bombs from AI leaders: Anthropic missed revenue estimates and OpenAI's performance was lackluster, shattering confidence in the AI narrative;

3. Geopolitical tensions in the Middle East escalated as US-Iran memos expired, raising fears of disruptions in the Strait of Hormuz and boosting safe-haven demand;

4. Regulators tightened oversight on high-flying stocks, dampening short-term speculative sentiment.

However, don't be overly pessimistic. Three major tailwinds emerged post-market to support the index:

First, large funds stepped in late to stabilize the market, aggressively buying broad-based ETFs. After reducing positions for over ten days (cumulative outflow >¥100bn), half of the ¥40bn outflow today was reversed in the last 30 minutes, sending a clear stabilization signal.

Second, SK Hynix announced a massive ₩40 trillion share buyback and cancellation to bolster industry confidence.

Third, the US Treasury intervened to ease pressure on overseas markets.

Objectively, this tech sell-off is a global 联动 (linked) move. Domestic support alone isn't enough; we need to see if overseas tech tracks can stabilize and recover.

Yesterday saw a double kill in short-term sentiment and tech sectors, pushing market mood to freezing point, reminiscent of the despair in July. Many investors wiped out weeks of gains in a single day.

I believe this crash is not a trend reversal but a sharp correction after a rally. The index rebounded from 3750 to near 4000 without significant pullbacks, accumulating heavy profit-taking pressure. The rise was driven by small/mid-cap tech stocks rather than large-cap blue chips.

With sentiment just warming up, many short-term funds chased highs. When external conditions weakened, internal chips loosened, amplifying volatility and causing a drop far exceeding external factors. Essentially, this is an A-share structural issue, not a fundamental deterioration.

Strategy: Holders should avoid panic selling. Those with cash can buy the dip in tranches and use T+0 trades to lower costs during rebounds. 4000 is not a ceiling, and 3750 remains solid support. After chip exchange, the uptrend will likely resume.

Looking ahead at sector opportunities:

1. Robotics: Yesterday's drop was a technical correction due to Unitree's listing overfilling expectations, not fundamentals. Quality names were unfairly sold off. Focus on Unitree and Tesla supply chain stocks. With Tesla mass production starting in Sept, the Tesla chain will likely lead the next wave. Maintain mid-term discipline.

2. Computing Power & Domestic OS: The logic remains intact. Big Tech (Alibaba, Tencent) continues heavy investment, which will eventually flow to supply chain partners. Late-session rebounds in Hong Kong indicate capital hasn't abandoned this track. Once the market recovers, computing power, domestic software, cybersecurity, and AI apps will rotate higher.

3. Strategic Resources & Non-ferrous Metals: Recent pullbacks in copper, rare earths, tungsten, and indium phosphide present buying opportunities. Gold and aluminum have short-term upside due to Middle East tensions and rising risk aversion.