A-share midday review | The Shanghai Composite Index fell by 0.52% below the 2800-point mark, China Shipbuilding Industry Corporation registered a collective significant increase, and bank stocks once again trended lower.

On September 3, the three major A-share indices differentiated, with the Shanghai Composite Index falling below 2800 points, while the Growth Enterprise Index and the Shenzhen Component Index continued to rise. By the close of trading, the Shanghai Composite Index was down 0.52%, the Shenzhen Component Index was up 0.82%, and the Growth Enterprise Index was up 0.9%. It is worth noting that large funds once again intervened, with significant trading volumes in the Shanghai and Shenzhen 300 ETFs. The Huatai Bairui Shanghai and Shenzhen 300 ETF (510330), Hua Xia Shanghai and Shenzhen 300 ETF (510330), and Jia Shi Shanghai and Shenzhen 300 ETF (159919) all traded over 700 million yuan, exceeding the full-day trading volume from yesterday. Additionally, the Huatai Bairui Shanghai and Shenzhen 300 ETF (510330) traded over 2 billion yuan, exceeding the morning trading volume from yesterday. Looking ahead, CICC points out that the current market has many characteristics of a bottom, with limited downside risk. Investor confidence recovery will require more positive factors to accumulate, and attention will be focused on the Chinese domestic monetary and fiscal policies for counter-cyclical adjustments. In terms of market performance, in the morning session the shipping sector collectively opened higher, with KSEC Intelligent Technology hitting the limit up; stocks in the electronic cigarette sector strengthened at the opening, with Shanghai Shunho New Materials Technology hitting the limit up; AI application companies were active, with Sora Concept, ChatGPT, and MR Concept rising, as well as Hongbo Co., Ltd., Shanghai Fengyuzhu Culture Technology, Shanghai Wondertek Software, Costar Group, and others hitting the limit up; the phosphorus chemical sector fluctuated and rose, with Sichuan Development Lomon hitting the limit up; medical and commercial concept stocks saw abnormal movements, with LBX Pharmacy Chain Joint Stock hitting the limit up; ST stocks continued to strengthen, with over 10 stocks such as Hunan Jingfeng Pharmaceutical, Holitech Technology, and Gohigh Networks hitting the limit up. In terms of declines, the five major state-owned banks all fell, with Industrial and Commercial Bank of China falling by over 3%, and Bank Of China, BANKCOMM, China Construction Bank Corporation, and Agricultural Bank Of China falling by over 2%. Looking at a longer period, Industrial and Commercial Bank of China, China Construction Bank Corporation, and BANKCOMM have all fallen by over 10% in the past five trading days, while Bank Of China and Agricultural Bank Of China have fallen by over 8%. In terms of main fund flows, funds favored the black household appliances, components, and navigation equipment industries, while funds flowed out of the consumer electronics, banking, and automotive parts industries. Institutional Views: Looking ahead, CICC points out that the current market has many characteristics of a bottom, with limited downside risk. Investor confidence recovery will require more positive factors to accumulate, and attention will be focused on the Chinese domestic monetary and fiscal policies for counter-cyclical adjustments. Guotai Junan: Internal and external macro environment resonate, probability of second rate cut increases Guotai Junan's research report states that China's manufacturing PMI fell to 49.1% in August, the lowest since 2009 for the same period. New orders and production index continued to decline, with insufficient demand dragging down supply. At the same time, raw material prices have fallen and the restocking cycle is not yet clear. Considering that the Fed is expected to start cutting interest rates in September, and the release of exchange demand of Chinese exporters is pushing exchange rates higher, the resonance of the internal and external macro environment means that now is the window period for the second rate cut of the year. Open Source Securities: Focus on Apple, Meta's new product releases in September, continue to layout AI Open Source Securities research report states that Apple will hold a new product launch event in September, possibly releasing a new generation of iPhone. The combination of Apple with AI is worth paying attention to. Meta will hold the Connect conference in September, and may release a new AR smart glasses by the end of the year. It is recommended to actively pay attention to the release of new AI hardware terminals, the growth of AI terminal shipments and the continuous breakthrough of multimodal AI model capabilities, which may drive the opening of commercial AI applications, and it is recommended to continue to layout AI. Hot Sectors: 1. The shipping sector is strong Stocks in the shipping sector opened sharply higher, with KSEC Intelligent Technology hitting the limit up, China Harzone Industry Corp. up over 10%, and CSSC Science & Technology, China Shipbuilding Industry Group Power, and CSSC Offshore & Marine Engineering all opening significantly higher. Review: On the news front, China CSSC is planning to through China Shipbuilding IndusAll shareholders issue A-shares in exchange for the merger of China Shipbuilding Industry. Guotai Junan Securities says, considering the domestic shipyard orders being full for 2024, with continuous improvement in volume, price, and profitability, several shipyards have already scheduled orders up to 2028. The industry chain performance is expected to enter a period of accelerated release, and the leading domestic shipbuilding companies are still highly regarded.2. Concept stocks of electronic cigarettes are active Concept stocks of electronic cigarettes were active at the opening, with Shanghai Shunho New Materials Technology hitting the limit up, and Shenzhen Jinjia Group, Jinlong Machinery & Electronic, Shenzhen Yinghe Technology, Huabao Flavours & Fragrances, Kennede Electronics Mfg. all opening high together. Comment: In terms of news, the State Tobacco Monopoly Administration issued a notice on the revision and issuance of the regulations on the management of electronic cigarette transactions on the 2nd, mentioning the establishment of a nationally unified electronic cigarette trading management platform by the State Tobacco Monopoly Administration. Tianfeng pointed out that the export value of electronic cigarette products is maintaining a growth trend, with significant growth in emerging markets. Key recommendations: CTIHK, SMOORE INTL. 3. Active direction of AI applications The direction of AI applications is active, with Sora concepts, ChatGPT, MR concepts rising. Hongbo Co., Ltd., Shanghai Fengyuzhu Culture Technology, Shanghai Wondertek Software, Costar Group all hit the limit up. Comment: HAITONG INT'L believes that the continuous iteration of large AI models is expected to bring broader AI application demand scenarios, meet incremental user needs, and suggest continuous attention to the progress of AI application landing. Since the beginning of this year, the development of large AI models in China has been rapid, with domestic models such as Kimi, Jieyue Xingchen, Zhixiang Weilai, and Zhipu gradually enhancing their capabilities. The overall trend of AI applications is still promising. 4. Weakness in the banking sector The five major state-owned banks collectively fell, with Industrial and Commercial Bank of China falling more than 3%, Bank of China, BANKCOMM, China Construction Bank Corporation, Agricultural Bank of China falling more than 2%. Looking back over a longer period, Industrial and Commercial Bank of China, China Construction Bank Corporation, and BANKCOMM have all fallen by more than 10% over the past five trading days, while Bank of China and Agricultural Bank of China have fallen by more than 8%. This article is reproduced from "Tencent Self-selected Stocks"; Edited by: Wang Qiujia.