Muyuan Shares Plunges Over 8%! 516670 Drops Nearly 5%, Yet Main Force Continues to Buy for 10 Days, Building Positions Against the Trend with Sustained Increases!

On March 23, the A-share market experienced volatility and adjustments, with the livestock breeding sector suffering a heavy decline. As of 11:06 a.m., the China Merchants Animal Husbandry ETF (516670) increased trading volume but fell 4.54%, with all major stocks weakening—Muyuan Foods plummeted 8.11%, Haid Group dropped over 6%, and Wens Foodstuffs declined more than 3%. Market sentiment in the sector was under pressure. However, in stark contrast to the price decline, investor enthusiasm for buying remained strong. As of March 20, this fund had experienced net capital inflows for 10 consecutive trading days, with the total amount of funds continuously increasing.

Analysis indicates that the deep correction in the livestock breeding sector is mainly due to short-term emotional disturbances and sector rotation, and does not shake the long-term fundamentals of the industry:

First, the reversal of the pig cycle is still expected, and capacity reduction continues to deepen. The pig breeding industry remains in the capacity reduction phase, with the number of breeding sows steadily declining, building momentum for a new upward cycle. Leading companies like Muyuan Foods, leveraging cost advantages, are expected to benefit first when the cycle reverses. Short-term stock price fluctuations do not alter the long-term value of these industry leaders.

Second, continuous 10-day contrarian capital accumulation confirms a bottoming consensus. During market panic, long-term funds view each pullback as a buying opportunity. The sustained net inflow into the livestock breeding ETF clearly indicates that institutional investors’ judgment of a pig cycle reversal has not changed due to daily volatility. This “buying more as prices fall” behavior is often a key signal that the sector is at a bottom.

Third, valuations are at historical lows, and safety margins are becoming more apparent. After long-term adjustments, the valuation of the livestock breeding sector has fallen to historic lows, with some leading companies’ price-to-book ratios near multi-year lows. Against the backdrop of ongoing capacity reduction and potential improvement in supply-demand dynamics, the sector offers high upside potential and safety margins.

Risk warning: Funds are subject to risks; investment should be cautious.