On April 9, A-shares opened lower and fluctuated in the morning session, with over 4,400 stocks declining across the market. By the midday close, the Shanghai Composite Index had fallen 0.73%, the Shenzhen Component Index dropped 0.31%, and the ChiNext Index declined 0.67%. The half-day turnover for the Shanghai and Shenzhen markets was 1.43 trillion yuan, shrinking by 446.6 billion yuan compared to the previous trading session.
Analysis identifies two primary culprits for the market adjustment. First, uncertainties have resurfaced shortly after the US-Iran ceasefire agreement: former US President Trump's shifting stance, refusing to acknowledge Iran's "10-point plan" as a foundation; Israel's attack on Lebanon; and the renewed closure of the Strait of Hormuz. The previously priced-in "ceasefire dividend" has been disproven, leading to a rapid contraction in risk appetite. Second, yesterday's sharp rebound in A-shares, coupled with previously high market expectations for an "April recovery" and accumulated gains, made geopolitical uncertainties a catalyst for profit-taking.
However, some analysts believe the fundamental foundation for the healthy development of the A-share market remains unchanged. The balance between the investment and financing functions of the A-share market has significantly improved, and the enhanced quality of listed companies provides more diverse sources of investment returns. Once external disruptive factors ease, the inherent stability of A-shares will gradually recover, eventually leading to a qualitative change and initiating a positive cycle of incremental capital inflows.
Returning to market performance, computing hardware concepts such as optical chips, optical modules, optical fiber cables, PCBs, and liquid cooling continued to strengthen. Stocks including Huiyuan Communications and Dongshan Precision hit the daily limit-up. OCS switches, solid-state transformers, and the Google supply chain remained strong, with Zhongheng Electric and Bojie Shares reaching the limit-up. Domestic hard technology concepts like semiconductors, advanced packaging, and lithography machines continued to rise, with Guangzhi Technology and Haili Shares hitting the limit-up. Foldable screens, consumer electronics, and Apple-related concepts gained strength, with stocks like Caihong Co., Ltd. and Hengmingda hitting the limit-up. Concepts such as lithium resources, rare earths, display panels, and gas turbines also performed strongly.
On the decline, AI application concepts like AI short dramas, AI marketing, Zhipu AI, and AI agents saw fleeting gains, with stocks including Yidian Tianxia and Chinese Online falling over 5%. Fintech, cross-border payments, stablecoins, and internet finance concepts collectively declined, with Zhonghua Yantu hitting the limit-down. Major consumption concepts like tourism, airport shipping, duty-free shops, and baijiu (white liquor) were weak across the board, with Sanxia Tourism briefly falling over 8%. Pharmaceutical concepts such as innovative drugs, weight-loss drugs, and pharmaceutical commerce declined again, with Chengda Pharmaceutical and Huiyu Pharmaceutical falling over 10%. Thermal power, green power, and electricity concepts retreated once more. Photovoltaic equipment, inverters, and space-based solar power concepts collectively trended lower, with Gaoce Shares dropping over 9%. Concepts including banking, insurance, securities, and real estate were uniformly weak. Power grid equipment, chemicals, humanoid robots, and the military industrial chain declined across the board.
**Hot Sectors** 1. **Computing Hardware Concepts like Liquid Cooling Continue Strengthening** Computing hardware concepts such as optical chips, optical modules, optical fiber cables, PCBs, and liquid cooling continued their strong performance. Dongshan Precision achieved a second consecutive limit-up, setting a new historical high, while Guangxun Technology touched the limit-up. *Commentary: The news catalyst is Google's announcement to significantly raise its 2026 TPU chip shipment target by 50% to 6 million units. The new-generation TPU v7 has a single-chip power consumption as high as 980W, requiring a 100% liquid cooling solution, highlighting the indispensable role of liquid cooling technology in high-end computing.*
2. **Domestic Hard Tech Concepts Like Semiconductors Continue Rising** Domestic hard technology concepts, including semiconductors, advanced packaging, and lithography machines, continued to climb, with stocks like Guangzhi Technology and Haili Shares hitting the limit-up. *Commentary: A latest UBS research report suggests that AI-driven HBM demand continues to erode DDR production capacity. Coupled with the simultaneous surge in traditional server replacement cycles and SSD storage demand, the global DRAM market's supply-demand gap is expected to persist until Q4 2027, representing an unprecedented memory super-cycle in nearly three decades.*
3. **Rare Earth Permanent Magnet Concept Rises Against the Trend** The rare earth permanent magnet concept gained against the broader market decline, with Huahong Technology hitting the limit-up. Stocks like Jiuling Technology, Xinlaifu, Zhongxi Youse, Shenghe Resources, and Xici Technology followed suit. *Commentary: On the news front, the price of praseodymium-neodymium oxide reached 751,300 yuan per ton in the most recent week, up 7.16% week-on-week, with the price center rising steadily since the beginning of the year. A Guojin Securities report notes that rare earth exports have increased significantly since early 2026, reflecting strong overseas restocking demand. With supply-side reforms持续推进 (continuing to advance), the rare earth sector is expected to see both valuation and performance improvements.*
**Institutional Views** **Shenwan Hongyuan: Fundamental Foundation for A-Share Market's Healthy Development Remains Unchanged** Shenwan Hongyuan believes that energy security and supply chain security are the bedrock for the overall stability of China's capital market. China has a high degree of energy self-sufficiency and diversified external energy supplies. The rising center of energy prices has led to a re-evaluation of China's advantages in new energy. Simultaneously, the fundamental basis for the healthy development of the A-share market remains intact. The balance between the investment and financing functions of the A-share market has markedly improved, and the rising quality of listed companies enriches the sources of investment returns. Once external disturbances subside, the intrinsic stability of A-shares will gradually recover, eventually transitioning from quantitative to qualitative change and initiating a virtuous cycle of incremental capital.
**CITIC Securities: Strategic Direction of Iran Situation Becoming Clearer, Anchor for Global Risk Assets to Follow** CITIC Securities points out that the US-Iran bilateral ceasefire agreement, mediated by Pakistan, likely stems from the US's insufficient military resources in the Middle East to achieve higher objectives, necessitating "cutting losses in time." The focus of the game has shifted to how to construct a sustainable security arrangement. Although subsequent negotiations will involve repeated back-and-forth, under realistic constraints, the strategic direction of the Iran situation is gradually clarifying, and the expectation anchor for global risk assets will become correspondingly clearer. Regarding A-shares, there was widespread reduction in positions but not a complete exit of funds in March; these funds represent potential short-term buying power post-conflict interruption. The market will recover, and the logic of China's manufacturing advantage pricing power will regain dominance once recession narratives fade. For Hong Kong stocks, after the earnings season, performance expectations have been fully adjusted. With the return of risk-averse funds, a valuation-driven rally is anticipated for April-May.
**Guotai Haitong: New Impetus for China's Market Rise Stems from the Manifestation of Its Own Growth Logic** Fang Yi, Chief Strategist at Guotai Haitong, stated that on April 8, the Shanghai Composite Index closed at 3995 points, with the board uniformly in positive territory. Compared to the ceasefire agreement, the market more reflects and confirms that the actions of both the US and Iran have their respective constraints and boundaries, which might be more crucial for understanding market trends. The end of risk pricing does not depend on whether the war ends, but on the market discerning the boundaries of the risk. Fang Yi indicated that this year, besides the support from falling risk-free rates and capital market reforms, the new impetus for the rise of the Chinese market comes from the increasing visibility of China's own growth logic. While the Middle East situation attracts significant attention, it can also easily cause the market to overlook positive domestic changes: the traditional economy is gradually stabilizing, and investment in transformative areas continues to accelerate. China's industrial transformation and stabilizing domestic demand inherently possess favorable conditions to counter stagflation risk narratives.
**China Securities (CSC): Maintains Positive Outlook on AI Sector, Especially Optical Communication Segment** A China Securities research report stated that as of March this year, the daily Token usage of the Doubao large model has exceeded 120 trillion, growing 1,000-fold since May 2024. Zhipu AI's January ARR was $40 million, with a year-end guidance of $1 billion, implying 25-fold growth. NVIDIA's significant investment in Marvell to develop silicon photonics technology was noted. The report maintains a positive outlook on the AI sector, including AI applications and AI computing power, particularly the optical communication segment encompassing optical fiber cables, optical modules, and optical chips.
Comments