On May 20, the A-share market experienced mixed movements during the morning session, with major indices diverging. The STAR 50 Index rose over 2%, hitting a new all-time high. By midday, the Shanghai Composite Index was down 0.45%, the Shenzhen Component Index fell 0.37%, while the ChiNext Index edged up 0.05%. The combined turnover for Shanghai and Shenzhen markets reached 1.91 trillion yuan in the first half of the day, an increase of 94.7 billion yuan from the previous session.
Notably, against the backdrop of a broad decline in global semiconductor stocks, China's domestic semiconductor and chip industry chain saw a strong rally. Areas such as memory chips, Changxin-related concepts, lithography machines, and advanced packaging led the gains. Stocks including Shanghai Hejing and Zhangjiang Hi-Tech hit the daily limit up, while companies like Huahong and GigaDevice reached new historical highs. Analysts believe that the upward trend in semiconductor sector sentiment, combined with the push for self-reliance and import substitution, is accelerating the domestic replacement cycle. Recent positive developments, such as strong earnings from Changxin Technology and the filing of the initial public offering and listing tutoring report for Yangtze Memory Technologies, have provided significant momentum for the entire semiconductor segment. Institutional analysis indicates that the shortage in the memory industry is expected to persist until 2027. Domestic memory manufacturers are likely to expedite capacity expansion, boosting demand for equipment and expanding market opportunities. Orders and the localization rate for equipment, materials, and components across the industry chain are anticipated to rise continuously, benefiting the CBA and advanced packaging supply chains.
In other market movements, computing hardware concepts such as optical modules, fiber optic cables, and composite copper foil showed localized activity, with stocks like Lihexing and Shijia Technology hitting the daily limit up. Liquor stocks saw a midday surge, with Jinhuijiu涨停. The photovoltaic sector briefly rallied, with Oujing Technology涨停. The oil and gas industry chain moved higher, while sectors including STAR Market new listings, electronic chemicals, OLED, and batteries also posted gains.
On the downside, power stocks experienced a significant correction, with Jingneng Power and Datang Power跌停. AI application concepts such as cultural media, AI e-commerce, and short dramas cooled off, with Shitou跌停. The robotics and motor sectors underwent adjustments, led by Sanxie Motor. The telecommunications operations sector declined, with China Telecom falling over 7%. Gold, non-ferrous metals, brain-computer interfaces, cloud computing, the automotive industry chain, and commercial aerospace sectors all closed in negative territory.
Looking ahead, Orient Securities noted that the market has begun to rebound after a brief adjustment, suggesting that a weekly-level correction does not hinder the overall upward trend. The firm expects the Shanghai Composite Index to continue challenging the 4,200-point mark. In terms of allocation, technology remains the dominant theme.
**Hot Sectors Analysis:**
1. **Semiconductor and Chip Industry Chain Continues Strong Performance** The semiconductor and chip industry chain maintained its momentum, with strength in memory chips, Changxin-related concepts, lithography machines, and advanced packaging. Stocks like Shanghai Hejing and Zhangjiang Hi-Tech涨停, while Huahong and GigaDevice reached new record highs. *Commentary: Changjiang Securities believes global wafer fab equipment spending will continue to grow from 2025 to 2027. Domestic leaders are steadily increasing their market share in key equipment areas such as etching, thin-film deposition, and cleaning. With ongoing R&D investment and an expanding product portfolio, these companies show clear long-term growth potential amid the import substitution trend.*
2. **Fiber Optic Concepts Show Repeated Activity** Fiber optic concepts remained active, with Hangdian hitting the daily limit up and reaching a new historical high. *Commentary: Reports indicate that global fiber demand is surging, driven by AI data center construction. Major Chinese fiber manufacturers have orders scheduled through early 2027.*
3. **Liquor and Photovoltaic Sectors See Midday Gains** Liquor stocks rallied during the session, with Jinhuijiu涨停, while the photovoltaic sector briefly surged, with Oujing Technology涨停. *Commentary: iMoutai announced on May 16 that, effective from midnight, Kweichow Moutai adjusted retail prices for some products in its self-operated system. For instance, the price of 53% vol 500ml Kweichow Moutai (Premium) increased from 2,299 yuan per bottle to 2,359 yuan per bottle.*
**Institutional Perspectives:**
- **Orient Securities:** The market has started to rebound after a short-term adjustment. A weekly-level correction does not affect the overall upward trajectory. The Shanghai Composite Index is expected to continue testing the 4,200-point level. Technology remains the primary focus for allocation.
- **Galaxy Securities:** Synergy between green power and computing power could achieve mutual benefits, leading to a revaluation of green electricity's value. Rapid growth in computing power demand is driving increased electricity consumption. China's data center electricity usage is projected to rise from 1,300 billion kWh in 2022 to 1,960 billion kWh in 2025, accounting for 1.5% to 1.9% of total societal electricity consumption. Looking ahead, data center electricity consumption is estimated to exceed 7,000 billion kWh by 2030, representing over 5% of total societal usage.
- **CITIC Securities:** The emergence of token factories and token operators is driving a revaluation of the industry chain. As major telecom operators introduce token packages, standardized token services are becoming accessible to a broader audience. Token factories and operators are facilitating a shift in the computing power leasing model—from fixed monthly rentals based on "bare-metal" server usage duration to billing based on actual token consumption. Leading computing power leasing providers hold a distinct advantage. Attention is advised on token factories and computing power leasing-related targets.
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