Is the A-share bull market still sustainable? Global stock indices face a "cold wave," and a wave of global asset revaluation may be about to begin.

Log in to Sina Finance App and search for [Information Disclosure] to see more evaluation levels.

【Related News】What happened? In the afternoon, A-shares declined sharply, with the Shanghai Composite Index experiencing its “four consecutive declines” in over a year.

U.S. chip stocks surged collectively, Western Digital soared 9%, a Chinese concept stock surged nearly 300% intraday, gold prices fell below $5,000.

Bank of America: Potential risks to financial market stability increased in March.

U.S. retail investors suddenly stopped “bottom-fishing.” What’s going on?

As overseas stock indices weaken and domestic stock ETFs face net redemptions, will the A-shares market lose the 4,000-point level amid “internal and external troubles”?

Author: Zou Yongqin

The current A-shares bull market, which started around September 2024, seems to be facing some troubles recently.

On March 16, 2026, Guojin Securities released a special research report indicating that last week (March 9 to March 13), ETFs mainly held by institutional investors continued to see net redemptions, primarily in broad-based ETFs (an important subcategory of stock ETFs).

In fact, net redemptions of stock ETFs have persisted for over two months. Wind data shows that at the end of December 2025, January 2026, and February 2026, the total shares of Chinese stock ETFs were 2,223.669 billion, 2,106.722 billion, and 2,097.790 billion respectively, showing a continuous decline.

Meanwhile, after the Shanghai Composite Index broke 4,000 points on January 5, it remained above this level for over two months but failed to trigger a further rally, and recently has been declining consecutively. On March 17, A-shares weakened again, with the Shanghai Index falling 0.85% to 4,049.91 points, testing the 4,000-point level again.

In A-shares history, only twice has the Shanghai Index stabilized above 4,000 points and maintained this for more than 20 trading days, and both times, once the index fell below 4,000, a long bear market followed.

Will this bull market repeat the same pattern?

Global stock indices face a “cold wave”

Since Israel and the U.S. launched a military strike against Iran on February 28, global attention has been more focused on oil prices, but a wave of global asset revaluation may also be underway.

Public information shows that for a long period before this Middle East conflict, A-shares often underperformed major overseas indices, especially during major geopolitical events. However, this characteristic has changed significantly since the outbreak of the Middle East conflict.

According to Wind data, from February 28 to March 17, Korea’s KOSPI fell 11.12%, Japan’s Nikkei 225 dropped 8.67%, France’s CAC40 declined 7.51%, and even the Dow Jones Industrial Average, considered the “leader” of global financial markets, fell 4.72%. In comparison, although A-shares also declined during this period, the Shanghai Index only fell 2.71%, showing some independence.

Regarding this change, Jiang Guoyun, Chairman of Shenzhen Times Bo Le Venture Capital Management Co., Ltd., told reporters that a very important reason is the shift in valuation.

“From a global valuation perspective, U.S., Japan, and European indices have already gone through long upward cycles, leading to relatively high valuations. Currently, only China’s stock market remains undervalued. Capital tends to flow from high-valuation areas to low-valuation areas—that’s the valuation switch,” he said.

So why are overseas indices collectively weakening now, or why did the valuation switch occur at this time? Jiang believes that with the outbreak of Middle East conflicts, the outlook for the global economy has become more uncertain, boosting strong risk-averse demand. Stock assets, due to their higher risk, are the first to be affected, leading to a broad decline in global indices. However, at the same time, China’s undervalued market has begun to show its safe-haven advantage.

Institutional profit-taking phase

Interestingly, while the A-shares market has shown some independence, research reports from multiple market institutions reveal that domestic professional institutional investors, once highly optimistic, have recently started to exit.

For example, according to a research report by Guojin Securities analyst Mei Kai on March 16, last week, ETFs mainly held by individual investors saw net subscriptions, but ETFs mainly held by institutions experienced net redemptions, primarily in broad-based ETFs. China Merchants Securities Research Institute also noted on March 15 that last week, ETF net redemptions amounted to 10.62 billion yuan, with stock ETFs alone redeeming 1.78 billion shares.

Stock ETFs dominate China’s ETF market. Although they are passive index-tracking products without forward-looking insights, the flow of funds through stock ETFs often reflects market participants’ expectations and strategic allocations.

Wind data shows that the total shares of Chinese stock ETFs peaked at 2,223.669 billion at the end of 2025 but have been declining since then, with 2,106.722 billion at the end of January and 2,097.790 billion at the end of February. Last week’s net redemptions continued this downward trend.

As stock ETF shares decline, the recent sideways movement of the Shanghai Index near 4,000 points has raised concerns about “institutional exit.” Which institutions are reducing holdings via stock ETFs? Could their actions negatively impact the A-shares market?

“From the latest market data, after reaching a historical high at the end of 2025, the total shares of stock ETFs have entered a two-month decline since January 2026. This trend is caused by multiple factors,” said Li Yiming, senior analyst at Morningstar China Fund Research Center. “First, institutional funds have been actively deploying in A-shares since 2024. With the bull market in 2024-2025, major broad-based indices and related ETFs have gained significantly, and institutional funds have realized profits in related holdings, setting the stage for profit-taking.”

“Second, since the beginning of 2026, a series of regulatory measures have been implemented. In January, the Shanghai Stock Exchange issued regulatory warnings to some listed companies, pointing out issues like inaccurate or incomplete disclosures related to commercial aerospace. At the same time, the Shanghai, Shenzhen, and Beijing stock exchanges announced new rules on January 14, raising the minimum margin requirement for new contracts from 80% to 100%, effectively increasing the capital threshold for margin financing and reducing leverage.”

“These measures clearly reflect regulatory guidance aimed at stabilizing the capital market and fostering a slow and steady bull trend, rather than suppressing market vitality. They are designed to prevent systemic risks caused by short-term volatility,” Li emphasized. “Considering the market gains, policy shifts, and regulatory cooling after overheated thematic trading, the continuous decline in stock ETF shares in early 2026 is essentially institutional profit-taking based on realized gains, aligned with regulatory guidance.”

He further noted that, based on publicly available holder structure data, the 2025 mid-year report shows that China Investment Corporation and several large insurance firms are among the top ten holders of broad-based ETFs, supporting the expansion and stability of ETF sizes in 2024-2025. However, before the official 2025 annual report, the market can only observe historical holdings through interim reports and quarterly disclosures, not real-time fund flows.

He also said that even if the total ETF shares decline in early 2026, the market can only infer significant reductions at a total level—specific institutional investors cannot be precisely identified until the 2025 annual report is released.

Will the Shanghai Index lose the 4,000-point level?

The market’s focus on the 4,000-point level stems from the fact that, although the A-shares market has a history of over 30 years, it is rare for the Shanghai Index to stay above 4,000 points and maintain this for more than 20 trading days. Only twice has this happened.

The first was during the “Share Reform Bull” in 2007, when the index broke above 4,000 on July 20 and held until March 13, 2008, totaling 157 trading days. The second was during the “Leverage Bull” in 2015, when the index stayed above 4,000 for only 57 days, from April 10 to July 1, 2015. Although it attempted to rebound above 4,000 twice in late July, it was unsuccessful.

Notably, after both instances of falling below 4,000, the A-shares market experienced long bear cycles—eight years after 2008, until 2014, and nine years after 2015.

The current bull market, which started in September 2024, saw the Shanghai Index break above 4,000 on January 5, 2026, and by March 17, it had been above this level for 46 trading days, approaching the previous 57-day record. With overseas indices weakening and domestic ETFs facing net redemptions, will the A-shares market lose the 4,000-point level and follow the previous patterns?

“I think this time is different from the previous two because the environment for the stock market is better,” Jiang said. “In previous bull markets, real estate was the main driver of China’s economy, and the capital market was less important. But now, the situation is reversed—the capital market is becoming the main market. Under this backdrop, on one hand, interest rates are falling; on the other, geopolitical conflicts are emerging globally, making China’s market valuations increasingly attractive. So even if there are short-term fluctuations, the long-term trend of staying above 4,000 points and moving higher seems quite certain.”

Regarding the recent continuous redemptions of stock ETFs, Jiang believes this is related to some institutions taking profits in stages. “Profit-taking is normal; there’s no need for excessive interpretation. From what I understand, only a small portion of institutions are doing this, and most remain optimistic about A-shares’ future.”

Li Yiming also said that investors should rationally distinguish between profit-taking and pessimism. The recent phased reduction of holdings in broad-based ETFs by institutions does not mean a long-term negative outlook for A-shares. Judging the true attitude of institutions requires analyzing their investment strategies, asset allocation, and the scale and rhythm of their reductions, not just fund flows.

“From a behavioral perspective, this round of reduction aligns with disciplined institutional operations—taking profits, optimizing portfolios, and managing volatility—not a negation of the market’s fundamentals or long-term growth,” Li concluded.