China's A-share markets closed higher on August 4, with the ChiNext Index surging 5.64%, the Shenzhen Component Index rising 3.25%, and the Shanghai Composite Index edging up 0.33%. Total trading volume across the entire market reached 2.23 trillion yuan. Communication and electronics sectors led the gains.
Several factors contributed to today's market performance. First, signs of easing tensions in the Middle East, the removal of some negative factors in the AI industry, and the nearing end of deleveraging in domestic and international markets have significantly boosted risk appetite. Optical communication and PCB stocks, key components of the AI hardware sector, were among the top performers. On the news front, South Korea's finance minister stated in a cabinet meeting that the country would work to improve stock market structure and stability. Meanwhile, US officials indicated that Iran and Oman are close to reaching an agreement on navigation through the Strait of Hormuz.
China's innovative drug BD (business development) transactions continue to heat up, with top pharmaceutical companies reporting earnings that far exceeded expectations. This has led to a recovery in industry sentiment, and the CRO (Contract Research Organization) sector performed strongly today. On August 3, a leading pharmaceutical company disclosed its semi-annual report, showing accelerated earnings growth and a significant upward revision of its full-year 2026 performance guidance, which greatly boosted market confidence.
The AI computing power market maintains strong demand, with semiconductor materials showing a supply-demand imbalance and improving price and volume trends. This, combined with sufficient valuation digestion, has driven gains in related sectors like tungsten hexafluoride and indium phosphide. The high demand for AI computing power is sustained by strong capital expenditure expansion intentions from top cloud providers. Global wafer fab capital expenditure for 2026 remains high, with capacity expansion for memory chips and wafer manufacturing gradually entering a concentrated ramp-up phase, benefiting the sector from downstream fab expansion. The semiconductor materials sector has shown signals of both price and volume increases, with China's average export price of tungsten hexafluoride in May 2026 reaching approximately 1.445 million yuan per ton, a 300% increase from the average price in December 2025. After the rapid market adjustment in July, we suggested that the market was gradually entering a left-side configuration zone, and we maintain this view. However, we believe short-term market volatility remains high, and the upward slope may slow compared to the previous phase.
In terms of allocation, we continue the "style rebalancing" approach from late June: prioritize AI hardware leaders with strong demand certainty, and moderately tilt towards lithium batteries, innovative drugs, non-banking financials, and export chains, which are under-allocated or underweighted by funds but have improving fundamentals. Risk warning: Views are for reference only, subject to change due to market factors, and do not constitute investment advice or promises. Funds carry risks, invest with caution. MACD golden cross signals have formed, and these stocks are showing strong upward momentum.
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