On Wednesday, global risk assets broadly rebounded as geopolitical risk premiums receded following signals from former President Trump regarding potential US-Iran negotiations. Asian-Pacific equities strengthened, precious metals bounced back, while crude oil prices fell sharply due to expectations of de-escalation in conflict zones. The recent Middle East developments have created a volatile "schizophrenic" narrative, whipsawing capital markets like a rollercoaster ride. The current situation exists in a quantum superposition of "fighting while talking," suggesting investors should fasten their seatbelts. Ultimately, in the face of Trump's social media presence, any analysis risks becoming obsolete...
Chinese A-ships opened higher before paring gains during the morning session, with the Shanghai Composite Index reclaiming ground above the 3,900-point level. The ChiNext Index and the Shenzhen Component Index both gained over 2% intraday. By the midday close, the Shanghai Composite was up 0.88%, the Shenzhen Component rose 1.37%, and the ChiNext Index advanced 1.26%. The combined turnover for Shanghai and Shenzhen markets reached 1.47 trillion yuan during the morning, an increase of 150.5 billion yuan from the previous session.
Sector-wise, the power sector repeatedly strengthened, led by green power plays. Over ten stocks, including Huadian Liaoneng Energy and Shaoneng Group, hit their upward limits. Computing hardware concepts such as fiber optics and optical modules continued their upward trajectory, with stocks like Tongding Interconnection and Dongguan Mentech Optical & Magnetic Co.,Ltd. reaching their daily limits. The token concept surged, driving computing power stocks higher, with firms like 263 Network and Auroda sealing their limits. The tourism and hotel sector climbed, with Guilin Tourism hitting its limit. Sports-related concepts saw repeated strength, as China Sports Industry and Shuhua Sports surged to their limits. The semiconductor chip industry chain remained active, with Baicheng Shares and Guofeng New Materials touching their limits.
On the downside, the oil and gas sector opened broadly lower, with Keli Shares and Tongyuan Petroleum falling over 5%. Photovoltaic equipment concepts weakened, with Airo Energy and Deye股份 declining more than 5%. The coal sector underperformed, as China Coal Energy dropped over 5%.
Looking ahead, China International Capital Corporation (CICC) indicated that the current level might represent a medium-term relative low for A-shares, with the deep correction presenting a strategic entry opportunity. Guosen Securities believes that during short-term fluctuations, market styles may rebalance, with some undervalued "old-economy assets" potentially gaining temporary dominance.
**Hot Sectors:** 1. **Token Concept Ferments, Computing Power Stocks Surge** The token concept erupted, boosting computing power stocks, with 263 Network and Auroda hitting their limits; the tourism and hotel sector also rose, with Guilin Tourism reaching its limit. *Commentary: The National Data Administration reported that China's average daily token calls reached 100 billion in early 2024, are projected to surge to 100 trillion by the end of 2025, and had already exceeded 140 trillion in March, representing a more than thousand-fold increase over two years.*
2. **Power Sector Erupts** The power sector surged, led by green power concepts, with over ten constituent stocks, including Huadian Liaoneng Energy (8 consecutive limits) and Shaoneng Group (5 limits in 6 days), hitting their limits. Guangdong Electric Power Development Co.,Ltd. achieved 4 limits in 6 days. *Commentary: CITIC Securities pointed out that "green fuels" and "computing-power synergy" were included in the government work report, aligning with China's energy independence strategy and AI competition strategy. Driven by dual rigid high-growth demands for green fuel production and green power supply for data centers, these two demands are expected to drive nearly 465 GW of wind turbine demand by 2030, fueling a super cycle for the wind power sector.*
3. **CPO Concept Active** The Co-Packaged Optics (CPO) concept performed actively, with Dongguan Mentech Optical & Magnetic Co.,Ltd., Alaide, and Kechuan Technology hitting their limits. *Commentary: U.S. optical communication concepts led gains, with Lumentum rising 10% to a record high intraday and Coherent up 6.78%. Additionally, China set a new optical communication transmission record, achieving a real-time bidirectional transmission capacity of 2.5 petabits per second over 10.3 km of 24-core single-mode fiber for the first time.*
4. **Semiconductor Equipment Concept Strengthens** The semiconductor chip industry chain was active, with Baicheng Shares and Guofeng New Materials touching their limits. *Commentary: SK Hynix announced plans to raise approximately $10 billion through a U.S. listing. The potential proceeds are intended for building AI infrastructure, such as a semiconductor cluster in Yongin, South Korea, and expanding memory product capacity.*
**Institutional Views:** **CICC: Current Level May Be a Medium-Term Relative Low for A-Shares** CICC stated that the present might be a medium-term relative low point for A-shares, with the significant correction offering a good布局 opportunity. Although short-term trends remain somewhat uncertain, the adjustment has further released market risks, leaving valuations at relatively reasonable levels. From a medium-term perspective, the fundamental macro environment remains unchanged, supporting the logic for a "steady advance" in the A-share market, with risk release and price declines creating favorable配置 opportunities.
**Guosen Securities: Market Style May Rebalance During Short-Term Volatility** Guosen Securities believes that during short-term fluctuations, market styles could rebalance, with some undervalued "old-economy assets" potentially gaining temporary advantage. However, from a medium-term thematic perspective, sectors representing economic transformation, upgrading, and security, such as artificial intelligence (AI) and advanced manufacturing, remain core allocation directions. These areas have genuine industrial policy and fundamental support and are more likely to lead the market into a new uptrend after adjustments.
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