On February 3rd, the market experienced a bottoming-out and recovery, with both the Shanghai Composite Index and the ChiNext Index rising over 1%, and the Shenzhen Component Index gaining more than 2%. By the close, the Shanghai Composite Index was up 1.29%, the Shenzhen Component Index had climbed 2.19%, and the ChiNext Index advanced 1.86%. The total trading volume for the Shanghai and Shenzhen markets was 2.54 trillion yuan, shrinking by 40.5 billion yuan compared to the previous trading session. So, what caused the wide and significant fluctuations in the A-share indices? When can the broader market be expected to stabilize? According to analysis cited: in the short term, on one hand, the momentum of declining external liquidity has temporarily stabilized, but geopolitical uncertainties persist; on the other hand, considering the approaching long holiday, sporadic deleveraging may still occur domestically. Therefore, the market is likely to remain volatile. Specifically: First, from last night to this morning, precious metals staged a strong rebound, the US leverage lending index also stabilized slightly, and virtual currencies also bounced back. However, it is noteworthy that it is still difficult to conclude whether this marks a reversal, as the rebound in the leverage lending index was weak, and the bounce in virtual currencies was modest, with Bitcoin still trading below the $79,000 level. It is hard to say that the liquidity landscape has completely turned around. Geopolitically, uncertainties in the Middle East remain. Trump stated that the US is in dialogue with Iran, adding, "If we can reach some kind of agreement, that would be great. If not, bad things could happen." He again issued military threats against Iran, repeating rhetoric about the US sending a "huge" fleet to Iran, "even larger than the one in Venezuela." Second, internally, the prevailing market expectation is that the market may gradually calm down in the final week before the Spring Festival. However, although the current trading volume and margin balance levels in the A-share market have declined from previous highs, they remain relatively elevated. As the long holiday approaches, these two key indicators are expected to trend towards convergence. Wind data statistics show that the margin purchase amount for the Shanghai and Shenzhen markets that day was 241.866 billion yuan, compared to 266.979 billion yuan the previous trading day; the margin repayment amount was 247.876 billion yuan, versus 290.522 billion yuan the previous session; the volume of securities lending sales for the day was 182 million shares, compared to 95.3601 million shares the prior day. Against this backdrop, market volatility is also expected to converge accordingly.
Returning to the market performance, the space photovoltaic concept led the gains, with stocks like Autowell and Shuangliang Energy Systems hitting the limit-up; the commercial aerospace and satellite internet concepts rebounded across the board, with over 20 stocks including Juli Sling and Aerospace Development reaching the limit-up; computing hardware concepts such as fiber optic cables, optical modules, and copper cable high-speed connections remained strong throughout the day, with companies like Robotech and Wally Gold Photoelectric hitting limit-up; the military industrial chain, including aircraft carriers, aero-engines, and large aircraft, collectively strengthened, with stocks like AECC Aero-Engine Control hitting limit-up; domestic hard technology concepts like semiconductors and memory chips rebounded, with stocks like Qiang Yi Co., Ltd. rising over 10%; chemical concepts such as soda ash, dyes, and titanium dioxide rebounded, with Hongbaoli hitting limit-up; the Xiong'an concept surged, with Langfang Development and others hitting limit-up; future industries including deep-sea technology, quantum technology, humanoid robots, autonomous driving, and AI applications collectively showed strength. Only a few sectors like banking, insurance, and baijiu (white liquor) performed weakly across the market.
Hot Sectors: 1. Space Photovoltaic Concept Leads Gains The space photovoltaic concept led the market gains, with Guosheng Technology, Jinjing Technology, Zerun New Energy, and Haiyou New Materials sealing limit-up positions. Commentary: Guosheng Securities stated in a research report that driven by the dual forces of exploding global space energy demand and the accelerated restructuring of the Sino-US supply chain, Chinese photovoltaic enterprises possessing aerospace certification qualifications, technical validation backing, and large-scale delivery capabilities are transitioning from "ground support" to "space-based core," suggesting that space photovoltaic demand could become the next growth frontier.
2. Computing Hardware Concepts Collectively Strengthen Computing hardware concepts such as fiber optic cables, optical modules, and copper cable high-speed connections were strong all day, with stocks like Robotech and Wally Gold Photoelectric hitting limit-up. Commentary: Guosheng Securities indicated that against the backdrop of a high-growth cycle in the computing industry chain, leading optical module manufacturers are accelerating capacity expansion in mainland China and Thailand, anticipating a concentrated release of industry capacity in the first quarter of 2026, which will drive earnings into a new climbing phase.
3. AI Application Concept Repeatedly Active The AI application concept remained repeatedly active, with Zhewen Interconnected hitting 5 limit-ups in 11 days. Commentary: Recent developments include several domestic model vendors updating their model progress. For instance, DeepSeek open-sourced a new OCR2 model, Kimi released and open-sourced the KimiK2.5 model, and Alibaba released the Qwen3-Max-Thinking flagship reasoning model. The intensive updates from leading models caused Chinese models to occupy the top three trending spots on the overseas social platform X that day.
Institutional Views: Looking ahead, Guotai Haitong Strategy believes that after the significant decline, the market is expected to gradually stabilize and regain its upward momentum before the Spring Festival, expressing firm optimism towards Chinese stocks. Regarding opportunities, China Securities Co., Ltd. (CSC) stated that the inflection point for the current baijiu adjustment cycle is approaching, presenting a cyclical bottom allocation opportunity for the baijiu sector.
1. Guotai Haitong: After the Plunge, Opportunities are at Hand Guotai Haitong Strategy posits that following the sharp decline, the market is expected to gradually stabilize and resume its upward trend before the Spring Festival, maintaining a firm bullish stance on Chinese equities. Their reasoning includes: First, global markets are rapidly pricing in the Fed's potential hawkish monetary stance, but from a path perspective, Waller's interest rate cut stance is more dovish and certain. Second, the Chinese government's policy focus is shifting towards domestic demand-led growth as a top priority, which is expected to boost China's economic prospects and asset returns. Third, the China Securities Regulatory Commission recently reiterated its commitment to "fully consolidating the steady and positive momentum of the capital market" and introduced new policies for medium- to long-term fund inflows. The indiscriminate panic selling has accelerated the clearing of trades, presenting a prime opportunity for investing in China.
2. Huatai Securities: The Current Adjustment is More Technical and Sentiment-Driven; Uptrend Expected to Resume After Technical Indicators Stabilize Huatai Securities noted that both A-shares and Hong Kong stocks experienced significant corrections on Monday. The "Waller trade" from the previous Friday triggered a global risk-off sentiment, which, combined with certain liquidity pressures on Monday, manifested as a broad decline in commodities and Asian stock markets. However, this adjustment is viewed as more technical and sentiment-driven. From a medium-term perspective, the favorable trends in liquidity and fundamentals for Chinese assets remain unchanged, and the upward trend is expected to resume once technical indicators stabilize.
3. Guotai Haitong: Precious Metal Price Volatility - Monitor Changes Brought by the New Fed Chair Guotai Haitong released a report stating that precious metal prices are being suppressed by crowded trades, the new Fed Chair nominee, and declines in US tech stocks. The nomination for the new Fed Chair has been made, and their policy path will significantly impact the US dollar, US Treasuries, etc. Looking ahead to 2026, central bank gold purchases and rising shares of gold ETF holdings will continue to be key factors supporting gold prices. The London silver lease rate has declined somewhat, but US silver inventory depletion is rapid. Trump's nomination of the relatively hawkish Kevin Warsh for the next Fed Chair has led markets to trade expectations of balance sheet reduction and a stronger US dollar, putting downward pressure on copper prices. In the near term, the market will continue to digest macro adjustment pressures, but the AI narrative persists, supply disruptions are frequent, and against the backdrop of a potentially widening global copper mine deficit, prices have underlying support.
4. China Securities Co., Ltd. (CSC): Inflection Point Nearing for Current Baijiu Adjustment Cycle; Sector Offers Cyclical Bottom Allocation Opportunity A China Securities Co., Ltd. (CSC) research report pointed out that the baijiu industry's "five-bottom phase" (policy bottom, inventory bottom, sell-through bottom, wholesale price bottom, production-sales bottom) is resonating with the capital market's "three lows and one high" (low expectations, low valuations, low mutual fund holdings, high dividends). Combined with the recent successive implementation of market strategies and the approaching Spring Festival peak season, the report concludes that the inflection point for the current baijiu adjustment cycle is nearing. With capital market expectations leading the way, the baijiu sector presents a cyclical bottom allocation opportunity.
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