Major stock indices narrowed their losses during afternoon trading on February 5th. At the close, the Shanghai Composite Index was down 0.64%, the Shenzhen Component Index fell 1.44%, and the ChiNext Index declined by 1.55%.
Sector performance showed significant gains in the major consumer sector, with the large financial sector strengthening in the afternoon. The computing power leasing concept also saw a recovery. On the downside, non-ferrous metals, power grid equipment, and oil and gas sectors were among the worst performers.
Over 3,700 stocks declined across the market. The combined turnover for the Shanghai and Shenzhen exchanges was 2.18 trillion yuan, a decrease of 304.8 billion yuan from the previous trading session.
The A-share market continues to experience volatility, with yesterday's leading solar sector becoming today's laggard.
Meanwhile, the story of the "Stock King," Kweichow Moutai, has entered a new chapter.
Last Wednesday, January 28th, the baijiu sector hit a new cyclical low before a slight rebound, an event that went largely unnoticed as attention was focused on soaring precious metal prices. During that day's session, Kweichow Moutai fell to a low of 1,322.01 yuan per share. Although it remained the "Stock King," its price was only tens of yuan higher than that of Cambricon, appearing somewhat precarious.
Last Thursday, January 29th, the baijiu sector experienced a sharp, high-volume surge, finally capturing market attention, though its sustainability was questioned, especially with precious metals still rising.
In retrospect, that day marked a shift in market sentiment, leading to significant volatility throughout the current week.
During this period, although the baijiu sector rarely ranked among the top 10 gainers, Kweichow Moutai gradually returned to the market's center stage.
First, from last Thursday to this Thursday, its stock price rose to a high of 1,565 yuan per share, re-establishing a price gap of several hundred yuan over former challenger Cambricon.
Second, influenced by Moutai's sustained upward momentum, the major consumer sector continued to attract capital attention despite the market's rapid rotation. Several sub-sectors within consumption became more active. For instance, sectors like film and cinema, travel and hotels, beauty and personal care, and home appliances, which had only sporadic performances in recent sessions, collectively appeared on the list of top gainers today.
Therefore, it's fair to say that just a week ago, almost no one believed the baijiu sector would rebound or that Moutai would experience a short-term surge. Even in the initial analysis following its first major rise, predicting the subsequent trend was difficult. The prevailing view at the time was that the baijiu sector appeared "cheap" after a prolonged decline, and if the market style shifted towards stability, its low valuation would be a positive factor. The sector's high trading volume indicated significant participation by short-term funds, suggesting lively future trading activity.
Now, a consensus has largely formed. From a short-term perspective, this serves as another successful case for the "believe early" strategy.
CICC noted that signals are increasingly indicating a bottoming of Feitian Moutai prices, reinforcing expectations for the leading company's stable performance across cycles. The company's increased supply before the Spring Festival responds to genuine demand and sets the stage for managing volume and pricing throughout the year, helping to maintain price stability after the peak season. As increased sales volume coincides with price resilience, the price floor for Moutai is becoming clearer, and market expectations for price stabilization are likely to be revised upwards.
From another perspective, the influence of leading stocks on market trends is highly significant. Essentially, they reflect the stance of major capital and affect the patience and confidence of follow-on investors.
Beyond Kweichow Moutai's role in the major consumer sector, some counterexamples can be found. For instance, this past Tuesday, Tencent Holdings weakened unexpectedly due to unsubstantiated rumors about taxes. Although the rumors were debunked the same day, leading to a long lower shadow in its stock price, Tencent's shares continued to fall with high volume over the next two days. This affected the Hang Seng Tech Index, Hong Kong-listed tech stocks, and even some related A-share sectors, which have recently performed poorly. These sectors are also influenced by external markets.
Similarly, key AI hardware stocks on the A-share market, have recently shown brief but unconvincing rebounds, a pattern reflected in their related sectors as well.
Some analysts suggest that recent noticeable pressure on high-valuation tech stocks indicates an overall decrease in market risk appetite, with "fear of highs" sentiment gradually emerging. Against this backdrop, low-valuation sectors like baijiu, real estate, and construction machinery have shown signs of position replenishment. Whether this can initiate a phase of corrective gains remains a key point for ongoing observation.
Looking ahead to February, one securities firm's research report states that net redemptions of equity ETFs peaked at the end of January and are expected to gradually ease. Furthermore, the post-Spring Festival resumption of work, rising policy expectations ahead of the "Two Sessions," and continued inflows of foreign capital provide a foundation for a moderate market uptrend.
Regarding sector allocation, a balanced strategy is recommended: first, maintain a long-term focus on the tech theme, including areas like electrical equipment and software services; second, watch for opportunities driven by cost pass-through from rising raw material prices, particularly in the chemical industry; third, position in the building materials sector, which benefits from urban renewal policies and steady growth logic; and fourth, allocate to defensive high-dividend assets, such as those in the coal industry.
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