Boosted by the Central Economic Work Conference, A-shares rallied on December 12 with trading volume surpassing 2 trillion yuan, though market performance was mixed—only 2,683 stocks closed higher. The power equipment sector led gains with a wave of limit-ups, while computing power concepts underperformed.
Analysts noted that short-term markets face a policy-data vacuum, making sustained rallies unlikely, with volatility remaining dominant. Tech sectors like power equipment, communications, and defense—aligned with policy direction and backed by solid earnings—attracted sustained inflows. Conversely, consumer stocks were sidelined amid lackluster earnings momentum.
**Trading Volume Hits 2.12 Trillion Yuan** Indices edged up, with Shenzhen outperforming Shanghai. The Shanghai Composite rose 0.41% to 3,889.35, while the ChiNext Index gained 0.97% to 3,194.36. The Shenzhen Component Index climbed 0.84%. The CSI 300, SSE 50, and BSE 50 indices saw modest gains, while the STAR 50 surged 1.74%.
Trading activity spiked, with daily turnover hitting 2.12 trillion yuan, up 233.7 billion from the previous session. Margin debt remained elevated at 2.51 trillion yuan as of December 11.
**Sector Highlights** Tech stocks dominated, with nuclear fusion, HBM, superconductivity, 4th-gen semiconductors, consumer electronics, and precious metals soaring. Banking, oil & gas, retail, and micro-cap stocks dipped slightly.
Among Shenwan’s 31 primary industries, 21 closed higher. Nonferrous metals, electronics, power equipment, machinery, communications, and defense sectors rose over 1%, while retail, conglomerates, and property declined.
**Power Equipment Outshines Computing Power** The power equipment sector saw 19 stocks hit limit-ups, including China XD Electric, Dongfang Electric, and Great Wall Electric. Computing power concepts lagged, with Moore Threads retreating 13% to 814.88 yuan/share.
**Market Drivers** Analysts attributed the rally to: 1. Pro-growth signals from the Central Economic Work Conference bolstering sentiment. 2. Inclusion of tech stocks in the CSI 300 index, triggering passive fund inflows that lifted sectors like electronics and communications.
**Post-Event Outlook** With the Fed’s rate cut and domestic policy clarity, markets may extend gains. Huajin Securities’ Deng Lijun team expects a "slow bull" trend, citing potential economic recovery and policy easing. Sectors like TMT, machinery, nonferrous metals, and new energy are favored.
**Investor Strategy** - **Short-term**: Focus on policy-backed tech (e.g., AI infrastructure, semiconductors) and cyclical sectors. - **Spring 2026**: Watch communications (optical modules, PCBs), semiconductors (localization), and battery tech (sodium/solid-state).
Consumer stocks remain out of favor pending earnings turnaround.
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