To The Moon

A broad market rebound unfolded on August 4, featuring an index-wide rally, broad-based stock gains, and standout sector performances. All three major A-share indices opened higher, with the ChiNext board leading gains as morning trading strengthened. By the midday close, the Shanghai Composite Index added 0.16%, the Shenzhen Component Index jumped 2.74%, and the ChiNext Index surged 4.83%. The STAR 50 rose 2.91%, and the Beijing Stock Exchange 50 gained 1.67%. Across the market, 3,760 stocks rose versus 1,599 decliners, with 85 hitting the daily limit up and just one hitting the limit down. Total turnover for the Shanghai and Shenzhen markets reached approximately 1.36 trillion yuan, a slight decrease of about 44 billion yuan from the previous session.

Leading the advance, the CPO and optical communication concept saw a full-scale breakout. Lianxun Instrument surged over 17%, Yuanjie Technology climbed more than 12%, and major players like Zhongji Innolight, Eoptolink Technology, and Tianfu Communication posted substantial gains. Dongshan Precision, Yongding Co., and Shijia Tech were among many stocks hitting their daily limit up. The CRO concept also erupted, with WuXi AppTec, Asymchem, and Baihua Pharma hitting their daily limit up, while Porton Pharma Solutions and Pharmaron Beijing followed. The computing power leasing concept extended its strength, with Meili Cloud notching a three-day winning streak, Hongjing Technology achieving a 20% daily limit up for a two-of-three pattern, and Qingyun Technology also hitting a 20% limit up. Litong Electronics, RunJian Co., and Jia Litu were among other limit-up stocks. The AI application sector remained active, with Chuanzhi Education advancing to a seven-day winning streak, Hengyin Technology achieving three consecutive limit-ups, and Fanli Technology and China Science Publishing both following a three-of-five pattern.

On the downside, the banking sector led the decline, with Industrial and Commercial Bank of China and Bank of China both falling over 3%. The baijiu sector weakened, with Kweichow Moutai dropping about 1.91%. Insurance, airport, and shipping sectors also showed weakness. Overall, capital flowed out of heavyweight sectors like banking and baijiu into technology and growth-oriented areas such as CPO, computing power, and innovative drugs, highlighting a clear structural rebound pattern.

Key Sectors

1. CPO and Optical Communication Concepts Surge

The sector triggered a wave of daily limit-ups, with stocks like Dongshan Precision, Yongding Co., Shijia Tech, Huilv Ecology, Huashengchang, and Tongyu Communication all hitting their limits. Lianxun Instrument soared over 17%, Optical Valley Tech gained more than 16%, Hengdong Optical rose over 16%, Xiechuang Data jumped over 14%, and Shijia Photonics also climbed over 14%. Yuanjie Technology rose over 12%, Eoptolink Technology surged over 11%, Tianfu Communication added more than 10%, and Zhongji Innolight gained over 9%.

On the news front, according to TrendForce, Nvidia's next-generation Spectrum-X CPO switches have started shipping to select partners, while Broadcom's 51.2T Bailly CPO switches continue to ship in small volumes, marking the official entry of co-packaged optics (CPO) technology into mass production. Nvidia Senior Vice President Gilad Shainer noted that the biggest opportunity in the optical communications market lies in scale-up, which requires ten times the bandwidth performance of scale-out. Additionally, the four major North American cloud vendors sustained high capital expenditure growth in the second quarter of 2026 and raised their full-year guidance, extending demand visibility to 2028. Citigroup indicated that the Chinese optical communications sector may present buying opportunities around the release of first-half 2026 earnings.

2. CRO Concept Explodes Higher

The sector opened strong and continued to climb, with WuXi AppTec hitting its daily limit up, bringing its total market cap to over 420 billion yuan. Asymchem, Baihua Pharma, Shuangcheng Pharma, Luoxin Pharma, and Hasanlian also hit their limits, while Porton Pharma Solutions, Pharmaron Beijing, Medicilon, Bojing Medical, Haoyuan Pharmaceutical, and Jinan Protein followed.

On the catalyst side, WuXi AppTec released its 2026 semi-annual report on the evening of August 3, reporting first-half revenue of 28.897 billion yuan, a 38.93% year-over-year increase. Net profit attributable to shareholders surpassed 10 billion yuan for the first time in a first-half period, reaching 11.08 billion yuan, up 29.43% year-over-year. The company raised its full-year 2026 guidance across the board, with total revenue expectations lifted from 51.3-53 billion yuan to 58.5-60.5 billion yuan, and revenue growth for continuing operations revised up from 18%-22% to 35%-39%. Wind data shows that as of August 3, 104 A-share biomedical companies have disclosed their 2026 first-half performance forecasts, with 58 expecting net profit growth and 28 anticipating a year-over-year increase of over 100%.

3. Computing Power Leasing Concept Extends Strength

The sector continued its upward momentum, with Hongjing Technology achieving a 20% daily limit for a two-of-three pattern, Meili Cloud hitting a three-day winning streak, and Qingyun Technology also scoring a 20% limit up. Litong Electronics completed a two-of-three pattern, Gaole Co. opened with a limit-up, and Xingyun Technology, RunJian Co., and Jia Litu were among others hitting their limits. Xiechuang Data, UCloud, and Hanxin Technology all rose over 10%.

According to data from the China Academy of Information and Communications Technology, domestic AI computing power demand surged 417% year-over-year in the first quarter of 2026, while effective supply grew only 128%, widening the supply-demand gap. Current spot prices for top-tier B300 units have surpassed 14.5 million yuan, and monthly rentals for H200 systems are also rising, indicating a tight supply situation for high-end computing power. Separately, reports indicate that the National Development and Reform Commission has disclosed plans for an additional 4 trillion yuan in direct investment during the "15th Five-Year Plan" period to accelerate the construction of a national integrated computing power system.

4. AI Application Sector Remains Active

The sector continued its strong performance, with Chuanzhi Education hitting its daily limit up to extend its winning streak to seven sessions. Hengyin Technology recorded three consecutive limit-ups, while China Science Publishing and Fanli Technology both followed a three-of-five pattern. Yidian Tianxia surged over 15%, Hanyi Co. hit a 20% daily limit up, and Guangyun Technology, Foxit Software, and BlueFocus followed higher.

Overnight, U.S.-listed AI application stocks Palantir and Snap both reported earnings that surpassed expectations. Palantir posted second-quarter revenue of $1.94 billion, up 93% year-over-year and well above analyst estimates of $1.8 billion. Snap's second-quarter revenue came in at $1.6 billion, exceeding expectations of $1.54 billion. Both companies' shares initially surged over 14% in after-hours trading. For Chuanzhi Education, the company recently launched a new "AI Embodied Intelligent Robot Development" course and introduced six teaching robot hardware units, with the first session scheduled for October.