China's three major A-share indices delivered mixed results on Tuesday (August 18), with the Shanghai Composite Index edging up 0.19% to close at 3,990.30 points, while the Shenzhen Component Index fell 0.56% and the ChiNext Index dropped 0.93%. Total trading volume across the Shanghai, Shenzhen, and Beijing exchanges reached 2.42 trillion yuan, a modest increase of 17.3 billion yuan from the previous session. The El Ni帽o weather event has fueled expectations of agricultural price hikes, triggering a wave of limit-up moves across the farming sector, with the market's first agriculture, fishery and animal husbandry ETF surging 3.46% on the day.
CXO stocks continued to dominate the healthcare sector with strong momentum, as ETFs with high CXO exposure extended their gains. The Hang Seng Healthcare ETF from 华宝基金 (159137), whose underlying index boasts the highest CXO weighting in the market at 52.5%, climbed another 1.25% to close at a five-month high. Geopolitical tensions lifted oil prices, pushing the 石油ETF华宝 (159019) up nearly 1% on the day. Meanwhile, banking stocks mounted a counter-trend defense of the market, with the flagship 银行ETF华宝 (512800) closing 0.75% higher.
According to 东方证券, although the index has faced resistance in its rebound, the market may still be in a phase of oscillating recovery. The firm noted that while the index is trending upward, the market structure may differ from before, with micro-level chip positioning remaining the primary driver of structural divergence. Investors are advised to avoid sectors with deteriorating chip structures. The brokerage also pointed out that investment opportunities likely remain in stocks with medium-risk characteristics, as the mid-cap blue-chip rally continues to unfold. Notably, risk appetite appears to be converging from the extremes toward the middle once again.
Four key investment directions were highlighted: upstream AI materials (covering various metals and non-metallic raw materials), CXO growth sectors with strong earnings certainty and favorable chip structures, brokerages trading at low valuations with earnings visibility, and agriculture, which could see profit improvements driven by supply-side price hike expectations in cyclical sectors.
Agriculture Sector Surges on El Ni帽o Price Expectations
The agriculture, fishery and animal husbandry sector showed sustained strength throughout the session, with the market's first dedicated ETF in this space (159275) rallying sharply after the open and maintaining elevated levels into the afternoon, ultimately closing 3.46% higher. Among constituent stocks, seed, planting, and agricultural product processing segments saw a cascade of limit-up moves. 神农种业 hit the 20% limit-up, 雪榕生物 advanced over 16%, and 12 other stocks including 天邦食品, 大北农, 敦煌种业, and 金健米业 all locked in limit-up gains.
The El Ni帽o event is driving up expectations for agricultural price increases. According to NOAA's August forecast, the probability of a strong El Ni帽o occurring between October and December 2026 stands at 99%, with the likelihood of a super-strong event reaching 90%. Institutional analysis suggests that commodity price performance has historically diverged during strong El Ni帽o episodes, with planting and seed industries directly affected by global weather disruptions, while livestock farming may benefit in the short term from improved feed costs. For hog and white-feathered chicken farming, the typical decline in corn and soybean meal prices during El Ni帽o years helps reduce feed costs and improve farming margins.
From a valuation perspective, the agriculture, fishery and animal husbandry sector remains at relatively low levels, suggesting a favorable entry point for allocation. Wind data shows that as of Wednesday's close (August 17), the underlying index of the first agriculture, fishery and animal husbandry ETF (159275) - the CSI All-Share Agriculture, Fishery and Animal Husbandry Index - traded at a price-to-book ratio of 2.2 times, positioning at the 5.1st percentile of the past five years, highlighting compelling long-term allocation value.
东方证券 expressed optimism across three sub-sectors: hog farming, where medium-term price sustainability is expected to drive earnings growth for producers; downstream sectors, where structural industry growth trends persist and profits should gradually transmit down the supply chain as hog prices recover; and the planting chain, where commodity price increases have already reached agriculture, with the upward trend in grain prices established and improving fundamentals for planting and seed businesses.
CXO Stocks Enter Main Rally Phase
CXO names continued their leadership within the healthcare sector on August 18, with major players breaking through key levels. 药明康德's A-shares set fresh record highs, while its Hong Kong-listed shares also closed at an all-time high. 药明生物 surged 5.24% to a near one-year peak, 药明合联 climbed 7.54% to a six-month high, and both 金斯瑞生物科技 and 康龙化成 (across A and H shares) hit three-year highs.
ETFs with substantial CXO exposure continued their upward trajectory. The 港股通医疗ETF华宝 (159137), whose underlying index has the highest CXO weighting in the market at 52.5%, rose another 1.25% to close at a five-month high. The largest medical ETF in the market by asset size, 医疗ETF华宝 (512170), which carries over 30% CXO exposure, logged its seventh gain in eight sessions.
Since late June, both the 港股通医疗ETF华宝 (159137) and 医疗ETF华宝 (512170) have formed V-shaped patterns on their daily charts. Fund manager 张放 noted that at this juncture, the A-share and Hong Kong healthcare sectors have transitioned from "absolute undervaluation repair" to a phase of "interim report delivery plus policy catalyst validation," with both valuation attractiveness and industry momentum supporting continued allocation.
On the earnings front, catalysts are building. 药明康德 reported semi-annual net profit that crossed the 10 billion yuan threshold for the first time in its history, accompanied by a substantial upward revision to its full-year guidance. 康龙化成 saw second-quarter revenue and adjusted profit grow 19.38% and 22.3% year-over-year, respectively, while 昭衍新药 guided first-half attributable net profit to surge between 884.9% and 1,377.4% year-over-year.
Policy tailwinds are also strengthening for innovative drugs. The 2026 medical insurance drug catalog and commercial insurance innovative drug catalog adjustments have completed expert review, with a number of products recognized for clinical value and innovation entering subsequent processes such as price negotiations and renewals. The dual-track system of "medical insurance plus commercial insurance" and mechanisms protecting innovative drug pricing continue to improve industry expectations.
AI4S (AI for Science) in the pharmaceutical field has added further momentum. 中邮证券 research indicates that the translation of AI4S into order growth across the CXO supply chain is a logical progression, potentially driving a broad re-rating of the sector. From an allocation standpoint, the recent recovery in A-share and Hong Kong healthcare sectors, led by CXO, still leaves room for valuation appreciation given the multi-year correction that preceded it.
Banks Counter-Trend Defense with Improving Fundamentals
As the broader A-share market consolidated, banking stocks mounted a counter-trend defense. The flagship 银行ETF华宝 (512800) closed 0.75% higher on the day. 中国银行 and 农业银行 both advanced more than 2%, while eight other stocks including 杭州银行, 交通银行, 工商银行, and 建设银行 each gained over 1%.
The National Financial Regulatory Administration recently released second-quarter 2026 banking industry metrics, revealing that commercial bank net interest margins have stabilized and profit declines have narrowed significantly. First-half net profit for commercial banks contracted by only 0.6% year-over-year, while second-quarter net interest margins recovered 1 basis point quarter-over-quarter to 1.41%, supported by slower loan rate declines and improved liability-side costs. Asset quality remained broadly stable, with major state-owned banks showing improvements in both asset quality and risk absorption capacity.
中信证券 believes listed banks are delivering better-than-expected margin performance with stable asset quality, continued capital strengthening, and stabilizing earnings growth. While July financial data reflected seasonal characteristics and a widening K-shaped economic recovery, the brokerage expects listed banks to maintain stable operating conditions through the earnings reporting season, with modest profit growth improvements. The limited scope for fundamental surprises suggests the sector will likely maintain its low-volatility pattern in the near term. Looking ahead to the third quarter, earnings trends should remain stable, with long-term narratives around macroeconomic conditions continuing to play out, sustaining full-year absolute return potential.
光大证券 observed that the recent technology rebound has maintained a "seesaw" relationship with banking stocks. While short-term upside momentum may be limited, the downside risk also appears constrained. As of August 18, the CSI Banking Index traded at a price-to-book ratio (LF) of 0.66 times with a dividend yield of 4.4%, suggesting that bargain-hunting entries in the second half of the year carry a high probability of success.
Historical data reinforces the case for banking stocks. 国联民生证券 statistics show that across 18 annual periods since end-2008, the banking index has outperformed the CSI 300 Total Return Index in 11 of those years, an overall win rate exceeding 61%, underscoring the sector's long-term allocation value.
The 银行ETF华宝 (512800) and its feeder funds (A-share: 240019; C-share: 006697) passively track the CSI Banking Index, which includes all 42 A-share listed banks, providing an efficient tool for capturing the sector's overall performance. With fund assets exceeding 9.5 billion yuan and average daily turnover above 800 million yuan this year, it ranks as the largest and most liquid among the 11 ETFs tracking the same index.
Note: The first agriculture, fishery and animal husbandry ETF (159275) refers to the first ETF tracking the CSI All-Share Agriculture, Fishery and Animal Husbandry Index. Institutional views referenced from: 东方证券 August 17 research report; 东方证券 August 16 research report; 中信证券 August 18, 2026; 光大证券 August 15, 2026; 国联民生 August 10, 2026; 中邮证券 August 17, 2026.
Risk disclosure: The agriculture, fishery and animal husbandry ETF passively tracks the CSI All-Share Agriculture, Fishery and Animal Husbandry Index, with a base date of December 31, 2004 and published on December 12, 2016. The oil ETF tracks the Guozheng Oil & Natural Gas Index (base date December 31, 2002, published December 30, 2014). The Hang Seng Healthcare ETF tracks the CSI Hong Kong Stock Connect Healthcare Thematic Index (base date December 31, 2018, published July 21, 2022). The banking ETF tracks the CSI Banking Index (base date December 31, 2004, published July 15, 2013). Past performance of indices does not guarantee future results. Any stocks mentioned are merely index constituents shown for illustrative purposes and do not constitute stock recommendations or represent fund management directions. All information provided is for reference only, and investors are solely responsible for their own investment decisions. Any views, analysis, or forecasts contained herein do not constitute investment advice of any form. Investors should carefully read fund legal documents including the Fund Contract, Prospectus, and Fund Product Information Summary to understand risk-return characteristics and select products matching their risk tolerance. Past fund performance does not predict future results.
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