In just two trading days, the Shanghai Composite Index successively broke through the 4000 point, 3900 point, and 3800 point levels.

Why does AI historical retracement data suggest that this round of correction is near the bottom?

Persistent panic caused by localized conflicts continues to spread. On March 20 and March 23, in just two trading days, the Shanghai Composite Index repeatedly fell below 4,000, 3,900, and 3,800 points. During the trading session on March 23, the index dropped to a low of 3,799 points, hitting a new low since October last year. From the peak of 3,815 points in December 2025, the Shanghai Composite rose to 4,197 points in early March, but has now retraced all gains, with a correction exceeding all previous bull markets in A-shares history.

According to Yao Pei of Huachuang Securities in a strategy report on March 22, this round of A-share correction may already be near the bottom. Based on historical experience in A-share bull markets, when macro and micro liquidity tighten and geopolitical conflicts occur, the market generally retraces 60% to 80% of previous gains. In the past five bull markets, the Shanghai Composite Index retraced 61% of gains due to geopolitical or unexpected events, and 82% due to macro liquidity tightening.

Last week, ETF fund flows showed early signs of change. Trading activity in thematic ETFs such as technology and cyclical sectors sharply declined, while broad-based market ETFs regained favor. Notably, the CSI 300 ETF by Huaxia (510330) continued to see net capital inflows, with nearly 1 billion yuan in net subscriptions over the past five trading days.

The CSI 300 ETF is the largest ETF category in China, serving as a core holding for long-term institutional investors both domestically and internationally, and as a preferred asset for “quasi-hedging” funds during extreme market conditions. As of the end of Q4 2025, institutional holdings of the Huaxia CSI 300 ETF (510330) accounted for nearly 90%. On March 19, the People’s Bank of China issued a statement: “We are committed to maintaining the stable operation of financial markets such as stocks, bonds, and foreign exchange, and are studying the establishment of liquidity support mechanisms for non-bank financial institutions under specific scenarios.”

The CSI 300 Index consists of the 300 largest and most liquid securities in the Shanghai and Shenzhen markets, representing key sectors such as technology, finance, consumer, and cyclical industries. Its components feature low volatility, steady performance, and a focus on shareholder returns.

Daily Economic News