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As the saying goes, the weather in June is as changeable as a child's mood. The A-share market appears similarly influenced by the current climate, displaying an extremely fractured performance over just three trading sessions.
At the beginning of the year, veteran market observer Peng Zu predicted that heightened vigilance would be needed in June, with the difficulty of monthly investment operations increasing. Recently, Peng Zu reiterated this view, noting that June markets are prone to wide swings, but structural opportunities still exist, with sectors showing better-than-expected interim earnings growth being the preferred allocation direction.
Tech Stocks Stage a Comeback
Unlike the strong start in May, major indices retreated on June 1st, yet over 3,000 individual stocks rose, creating a scenario of profiting from stocks while losing on the index. On June 2nd, indices rebounded across the board, but nearly 4,000 individual stocks remained flat, leaving investors with gains on the broader market but losses in their personal accounts.
Today, the A-share market opened continuing the divergent pattern of the previous two days. The Shanghai Composite Index opened slightly lower before fluctuating into positive territory, while the Shenzhen Composite Index and the ChiNext Index opened higher and surged, with the ChiNext Index hitting a new historical high. Sector-wise, capital continued to flock to hardware technology, with concepts like CPO, optical communication, and packaging & testing leading gains, sustaining the market's split characteristics.
The optical communication industry chain received a boost from industry news on June 2nd, with market rumors suggesting NVIDIA's SpectrumX silicon photonics switch is advancing towards commercial deployment. On June 3rd, the Beijing Optical Network Seminar and the Shanghai CPO Asia industry conference were held simultaneously, with discussions focusing on indium phosphide, thin-film lithium niobate, and the localization of silicon photonics, bolstering sector sentiment. From a capital flow perspective, CPO stocks corrected on June 1st while funds clustered in low-position cyclical sectors like coal and power, completing a short-term sector shakeout. On June 2nd, capital rotated from cyclical sectors back into computing hardware. By June 3rd, funds were concentrated in CPO, making it the day's dominant market theme.
Jensen Huang's remarks at GTC served as a significant catalyst for the optical communication sector: as Agent AI scales, AI computing power construction is shifting from single-GPU competition to distributed collaborative computing across entire clusters. Under the disaggregated operation model of computing clusters, the demand for internal compute, memory, and bandwidth interconnectivity within data centers has surged significantly. High-speed optical interconnects, switching chips, and optical modules, as foundational computing infrastructure, are seeing their industry demand logic continuously improve.
Weekly Investment Opportunities in June
At the start of the year, Peng Zu made predictions about the A-share market's rhythm for the year, and the market's performance in the first five months closely aligned with his forecast. Back then, he specifically warned of the need for high alertness in June, citing increased difficulty in investment operations.
Peng Zu suggests that June's investment opportunities can be allocated based on the timeline of key events.
The first week is AI Catalysts Week, featuring Jensen Huang's GTC keynote on June 1st, followed by the Cisco Live Summit, the Snowflake Summit, and Microsoft's Build developer conference. Broadcom releases earnings on June 3rd. Subsequently, the US non-farm payrolls data will be released, with its strength directly influencing expectations for the Federal Reserve's subsequent monetary policy. For A-shares, focus can be placed on targets related to the NVIDIA supply chain and the Broadcom supply chain.
The second week marks the end of Tim Cook's tenure as Apple's CEO. US CPI data is released on Wednesday, a key inflation indicator for June. Additionally, according to previous reports, SpaceX is set to list on Nasdaq around June 12th. Its massive fundraising could temporarily divert short-term capital from US tech stocks, causing sector volatility, while A-share commercial aerospace sectors are susceptible to sentiment-driven catalysts.
The third week features the Federal Reserve's FOMC meeting on June 16th-17th. The dot plot and policy statements will guide global liquidity expectations, serving as the core macroeconomic variable for the month. June 18th is a quadruple witching day, where the simultaneous expiration of derivatives can amplify market fluctuations. In A-shares, the non-ferrous metals sector is particularly sensitive to Fed policy.
The fourth week sees NVIDIA holding its annual shareholder meeting on June 24th. The annual rebalancing of the Russell 2000 index is concentrated at the end of June. Passive fund rebalancing primarily affects US small-cap stocks, with minimal impact on A-share capital flows or fundamentals.
Today, stocks in the NVIDIA supply chain performed strongly, with Shenzhen Edadoc Technology Co.,Ltd. hitting the 20% daily limit up, while Dongcai Technology and Quectel Wireless Solutions also reached the 10% daily limit up. Helium and Tianzhun Technology also achieved gains exceeding 10%.
Focus on Companies with Better-Than-Expected Earnings in June
Judging by first-quarter earnings this year, the technology sector shows strong growth momentum. According to Shenwan industry classification statistics, overall profits for concepts like memory, HBM, optical modules, AI computing power, and optical chips have doubled.
Among individual stocks, 49 companies that were profitable in the same period last year saw their Q1 net profit attributable to shareholders grow by over 10 times year-on-year, with technology stocks constituting the majority.
Against the backdrop of AI large model evolution and continued increases in capital expenditure on computing power by global cloud providers, key overseas customers' demand for high-end optical modules like 800G has grown significantly, with acceleration towards 1.6T and higher rates. The optical fiber and cable sector shows a strong recovery trend, driven by new incremental demand from AI computing center cluster construction and a year-on-year surge in spot prices for G.652.D bare fiber. Core targets in the communication components and equipment sector benefit from 5G-Advanced and AI network infrastructure upgrades, with demand for switches driving a structural recovery. The penetration of AI large models to the edge in the IoT sector is pushing IoT devices to upgrade from simple "connectivity" to "intelligent sensing + edge computing." With the start of the new "15th Five-Year Plan" cycle, the satellite communication sector, including commercial aerospace and satellite internet as new quality productive forces, is expected to accelerate industrial implementation. For telecom operators, computing power and emerging AI businesses are becoming significant growth drivers.
(Mentioned stocks are for illustrative analysis only and not investment recommendations.)
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