On May 18th, the three major A-share indices opened collectively lower. The Shanghai Composite Index fell by 0.37%, while the ChiNext Index declined by 0.87%. In terms of sector performance, the oil and gas sector was active, with Tong Petrotech Corp. rising nearly 3%. Precious metals and photovoltaics were among the sectors leading the declines.
Regarding the market outlook, one institution suggests that following a period of overheating in the AI industrial chain, the recent cooling-off is only temporary. In the medium term, it is recommended to seize adjustment opportunities and actively engage, continuing to emphasize a focus on core industrial directions: first, fully embracing the AI industrial chain, where computing power and supporting infrastructure are of paramount importance. Second, paying attention to sectors with strong alpha effects, such as energy storage, machinery and equipment, memory and semiconductor equipment, and defense.
Another institution believes that after the short-term "cold wind," "midsummer" and "late autumn" are more worthy of anticipation. Their response strategies include: 1) Using a long-term perspective to navigate short-term fluctuations and continuing to hold onto sectors with the most certain prospects, such as optical communications. 2) Expanding from strong main themes and continuing to explore segmented opportunities within AI. 3) If needing to respond to market concerns in the short term, traditional and new energy sectors are good options for hedging. The focus should be on the diffusion of the AI theme towards upstream infrastructure, downstream hardware, and downstream applications.
For traditional cyclical products, the recommendation is to focus on varieties where systemic capacity elimination has genuinely occurred or where supply is absolutely constrained.
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