On April 9, China's three major A-share indices experienced a pullback throughout the trading session with reduced volume, with over 4,200 stocks declining across the broader market. At the close, the Shanghai Composite Index fell 0.72%, the Shenzhen Component Index dropped 0.33%, and the ChiNext Index declined 0.73%. The total trading volume for the Shanghai and Shenzhen markets was 2.13 trillion yuan, shrinking by 300.4 billion yuan compared to the previous session.
Analysis indicates two primary factors behind the market adjustment. First, uncertainties re-emerged shortly after the US-Iran ceasefire agreement, as former President Trump refused to acknowledge Iran's "10-point plan" as a foundation, Israel launched attacks on Lebanon, and the Strait of Hormuz closed again. The anticipated "ceasefire dividend" previously priced in by the market was invalidated, leading to a rapid contraction in risk appetite. Second, following a strong rebound in A-shares the previous day and elevated expectations for an "April recovery" that had already driven gains, geopolitical uncertainties acted as a catalyst for profit-taking.
However, Shenwan Hongyuan believes the fundamental foundation for the healthy development of the A-share market remains intact. The equilibrium between the investment and financing functions of A-shares has significantly improved, and enhanced quality among listed companies provides more diverse sources of investment returns. Once external disturbances ease, the intrinsic stability of A-shares will gradually recover, eventually transitioning from quantitative to qualitative improvement and initiating a virtuous cycle of incremental capital inflows.
In market performance, computing hardware concepts such as optical chips, optical modules, fiber optic cables, PCBs, and liquid cooling continued to strengthen. Stocks like Accelink and Dongshan Precision hit the daily limit-up. OCS switches, solid-state transformers, and the Google supply chain remained strong, with companies like Zhongheng Electric rising by the limit. Domestic hard-tech concepts, including semiconductor materials and equipment, lithography machines, and advanced packaging, extended their gains, with Guangzhi Technology and Haili Co. reaching the limit-up. The commercial aerospace sector saw localized activity, with Julizhuang and Aerospace Electric among the limit-up gainers. The memory chip concept continued its rebound, with Shikong Technology hitting the limit-up. Foldable screens, consumer electronics, and the Apple supply chain rose throughout the session, with Caihong Co. and Hengmingda among the limit-up stocks. Lithium resources and rare earths were among the few concepts showing strength.
On the downside, fintech, cross-border payments, banking, insurance, securities, and internet finance concepts declined across the board. Zhonghua Yantu fell by the limit-down, while Yinzhi Jie dropped over 7%. AI application concepts such as AI short dramas, AI marketing, and AI agents saw a one-day rally fizzle, with stocks like Epoint and Chinese Online falling over 5%. Broad consumption concepts, including tourism, duty-free shops, baijiu, and retail, weakened overall. Pharmaceutical concepts like innovative drugs, weight-loss drugs, and pharmaceutical commerce declined again, with Chengda Pharmaceutical and Huiyu Pharmaceutical falling over 10%. Photovoltaic equipment, inverters, and space-based solar concepts collectively weakened, with Gaoce Co. down over 9%. Power industry chains, including grid equipment, virtual power plants, and UHV, remained weak, with Xinzhong Port approaching the limit-down. Computing power leasing, cloud computing, and domestic computing concepts fell collectively, with Hengrun Co. down over 7%. Humanoid robots, autonomous driving, space computing, chemicals, and the "China-specific valuation" concept all underperformed.
**Highlighted Sectors:**
1. **Computing Hardware Concepts Like Liquid Cooling Continue to Strengthen**
Optical chips, optical modules, fiber optic cables, PCBs, and liquid cooling concepts extended gains, with Accelink and Dongshan Precision among the limit-up stocks.
*Commentary:
2. **Domestic Hard-Tech Concepts Like Semiconductors Extend Gains** Semiconductor materials and equipment, lithography machines, and advanced packaging concepts continued to rise, with Guangzhi Technology and Haili Co. hitting the limit-up. *Commentary: UBS's latest research report suggests that AI-driven HBM demand continues to encroach on DDR capacity. Coupled with the replacement cycle for traditional servers and simultaneous growth in SSD demand, the global DRAM supply-demand gap is expected to persist until the fourth quarter of 2027, marking an unprecedented super-cycle in memory storage over the past three decades.*
3. **Rare Earth Permanent Magnet Concept Rises Against the Trend** The rare earth permanent magnet sector gained against the market trend, with Huahong Technology hitting the limit-up. Jiuling Technology, Xinlaifu, Zhongxi Nonferrous, Shenghe Resources, and Xici Technology followed with gains. *Commentary: The price of praseodymium-neodymium oxide reached 753,100 yuan per ton in the past week, up 7.16% week-on-week, with the price center rising steadily since the beginning of the year. Guojin Securities research notes that rare earth exports have increased significantly since early 2026, reflecting strong overseas restocking demand. With ongoing supply-side reforms, the rare earth sector is expected to see both valuation and earnings improvements.*
4. **Commercial Aerospace Concept Sees Localized Activity** The commercial aerospace sector showed localized strength, with Julizhuang and Aerospace Electric among the limit-up stocks. *Commentary: Two key developments have stimulated the sector: China successfully launched a 21-satellite low-orbit internet constellation early today, and US commercial aerospace giant SpaceX may benefit from potential US relaxations on satellite spectrum power limits.*
**Institutional Views:**
**Shenwan Hongyuan: Fundamental Foundation for A-Share Market's Healthy Development Remains Intact** Shenwan Hongyuan asserts that energy security and supply chain security form the basis for overall stability in China's capital markets. China's high energy self-sufficiency rate and diversified external energy supplies, coupled with rising energy price centers, have led to a reassessment of China's advantages in new energy. The fundamental foundation for the healthy development of the A-share market remains unchanged. Improved balance in investment and financing functions, along with higher-quality listed companies, provide more diverse investment return sources. Once external disturbances subside, A-shares' intrinsic stability will gradually recover, leading to qualitative transformation and a virtuous cycle of incremental capital.
**CITIC Securities: Strategic Direction of Iran Situation Becoming Clearer, Anchoring Expectations for Global Risk Assets** CITIC Securities points out that the US-Iran bilateral ceasefire agreement, mediated by Pakistan, likely stems from insufficient US military resources in the Middle East to achieve higher objectives, necessitating "timely loss cutting." The focus has shifted to constructing sustainable security arrangements. Although negotiations will see repeated fluctuations, the strategic direction of the Iran situation is clarifying under practical constraints, which will anchor expectations for global risk assets. For A-shares, funds that reduced positions but did not exit in March represent potential short-term buying power post-conflict interruption. Market recovery is expected, with the narrative of China's advantage in manufacturing pricing power re-emerging as recession concerns fade. For Hong Kong stocks, after full adjustments in earnings expectations post-reporting season, a valuation-driven rally is anticipated in April-May as risk-averse capital returns.
**Guotai Haitong: New Momentum for China's Market Stems from the Manifestation of Its Own Growth Logic** Fang Yi, chief strategist at Guotai Haitong, stated that with the Shanghai Composite Index closing at 3995 points on April 8 and the market broadly rising, the market reflects and confirms that both the US and Iran face their own constraints and boundaries, which is more critical for understanding market trends. The end of risk pricing depends not on whether the war ends, but on the market recognizing the boundaries of risk. Fang Yi noted that besides lower risk-free rates and capital market reforms, new momentum for China's market this year comes from the explicit manifestation of China's own growth logic. While the Middle East situation attracts attention, it may overshadow domestic positive developments, such as the gradual stabilization of the traditional economy and accelerated investments in transformative sectors. China's industrial transformation and stabilizing domestic demand inherently possess favorable conditions to counter stagnation-inflation risk narratives.
**China Securities: Maintains Positive Outlook on AI Sector, Particularly Optical Communication Segment**
China Securities research reports 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's January annual recurring revenue was $40 million, with a year-end guidance of $1 billion, projecting 25-fold growth.
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