A sharp intraday reversal
Chinese equities rebounded after early selling, with the Shanghai Composite closing 0.9% higher and the blue-chip CSI300 gaining 1.7%. The CSI300 had fallen as much as 1.9% earlier in the session before ETF activity helped reverse the move.
The rally was strongest in growth-oriented segments. The Shenzhen index rose 2.5%, the ChiNext index jumped 4.2% and the technology-heavy STAR50 added 3%.
ETF flows raise support expectations
The turnaround followed a surge in trading in exchange-traded funds commonly associated with China's state-backed “National Team.” The activity prompted market speculation that official support had returned to stabilise equities after a prolonged decline.
Optical-networking companies Zhongji Innolight, Eoptolink Technology and TFC Optical Communications also issued statements expressing confidence in the sector's long-term outlook. The comments helped improve sentiment toward technology shares after a difficult period for growth assets.
The weekly trend remains weak
Despite the daily rebound, the CSI300 lost 1.6% for the week. It was the index's 11th consecutive weekly decline and the longest losing streak since the benchmark began in 2005.
The index remained about 19% below its June 22 closing peak, leaving it close to the 20% fall commonly used to define a technical bear market. That gap shows why a single session of ETF-led buying is not yet enough to establish a durable change in trend.
Regional markets find selective support
Hong Kong stocks also recovered. The Hang Seng rose 158.69 points, or 0.69%, to 23,093.37, while the Hang Seng Tech Index gained 2.05%. BYD advanced 6.23%, XPeng rose 5.1% and CATL gained about 5.4%. Even so, the Hang Seng ended the week roughly 4.52% lower, while turnover reached HK$249.78 billion.
What investors should watch
Morgan Stanley remained cautious, pointing to weak domestic demand, liquidity pressure and valuations that had not clearly reached a bottom. RBC Wealth Management cited insufficient fiscal stimulus and disappointing earnings as key pressures.
For global investors, the next test is whether ETF demand broadens into sustained private buying and whether earnings or policy measures improve the growth outlook. A durable recovery would require more than short-term support: stronger domestic demand, clearer earnings visibility and stable liquidity would all help turn the rebound into a trend.
