A-share market midday review | ChiNext Index rises by 0.35% Medical business and solid-state battery sectors boom Consumer electronics concept stocks adjust

Overnight, the three major U.S. stock indexes collectively closed down, all posting their largest single-day declines since August 6th. In early trading on September 4th, the Asia-Pacific stock markets all fell, with Taiwan's weighted stock index falling by 5%, the Nikkei 225 index falling by over 4%, and the South Korean KOSPI index dropping by nearly 3%. In the A-share market, the indexes rose, with the ChiNext Index leading the way in turning positive, briefly falling by over 1% at the opening; the Shanghai Composite Index and the Shenzhen Component Index narrowed their declines. By the close, the Shanghai Composite Index fell by 0.48%, the Shenzhen Component Index fell by 0.1%, and the ChiNext Index rose by 0.35%. On the market, pharmaceutical and commercial stocks quickly rose, with LBX Pharmacy Chain Joint Stock hitting its limit up for the second consecutive day; insurance stocks fluctuated but strengthened, with Hubei Biocause Pharmaceutical hitting its limit up; the solid-state battery concept became active again, with Fuxin Dare Automotive Parts and Zhejiang Narada Power Source rising by over 10%; the agricultural sector rose against the trend, with Hainan Jingliang Holdings hitting its limit up; the real estate sector opened strong, with Deluxe Family hitting its limit up; consumer electronics stocks had mixed performances, with Kunshan Kersen Science & Technology hitting its limit up for 8 consecutive days, Sunyes Manufacturing and Ways Electron hitting the limit up, and Foxconn Industrial Internet dropping by nearly 5%. In terms of declines, AI hardware concepts opened lower, with Shenyu Communication Technology Inc. falling by over 10%, Shenzhen Woer Heat-shrinkable Material falling by nearly 6%, and NVIDIA falling by over 9% overnight, marking its largest single-day decline since late April; oil and gas stocks continued to fall, with CNOOC Limited falling by over 5% and Zhongman Petroleum And Natural Gas Group Corp., Ltd falling by over 4%; the industrial metals sector fell at the opening, with North Copper and Jchx Mining Management falling by over 3%. In terms of main fund flows, funds favored industries such as pharmaceuticals, real estate, and banks; funds flowed out of industries such as optical electronics, software development, and consumer electronics. Institutional Views: Looking ahead, China Securities Co., Ltd. believes that with the current earnings window overlapping with continued fundamental pressures from domestic economic data, policies are expected to continue to exert force, which could limit the downside of the market. China Securities Co., Ltd.: A-share value highlights below 3000 points China Securities Co., Ltd. believes that with the current earnings window overlapping with continued fundamental pressures from domestic economic data, policies are expected to continue to exert force, which could limit the downside of the market; in addition, the convening of various technology industry conferences this month may drive related thematic investment opportunities, thereby enhancing structured market performance. In the medium to long term, with A-shares currently below 3000 points, there is still a valuation advantage, with the value of allocation highlighted, making buying on dips a good choice. Tianfeng: New energy and unmanned transportation will reshape the transportation landscape Tianfeng research report states that the application of new energy and unmanned driving technology will significantly reduce energy and labor costs. As toll roads gradually expire, tolls will decrease, and overall road transportation costs are expected to decrease significantly, with the share of transport volume expected to rise. In the passenger transport sector, online car-hailing and ride-sharing services will gradually divert traditional taxis and high-speed rail markets; in the freight transport sector, environmentally-friendly vehicles such as natural gas heavy-duty trucks will divert railway freight transport. The promotion of intelligent driving policies will also increase traffic flow and capacity, benefiting companies such as Didi, DIDA INC, and Zhongtong Express. CITIC SEC: Power chain industry remains a good choice for asset allocation CITIC SEC research report believes that the power chain industry, with its multiple links, large scale, and good growth prospects, remains a good choice for asset allocation. Power chip, server, and network communication links are the largest sub-domains of the power chain industry. Calculations show that by 2025, chips and AI servers will have performance elasticity of over 4 times compared to 2023, and optical modules will have performance elasticity of over 2 times. As for domestic substitutes, there is expected to be a turning point in chip economics in the second quarter of 2024, which may promote a commercial positive cycle. It is suggested to focus on global and domestic leading power chip companies, server companies that have core cooperation with chip manufacturers, and leading optical module companies. Popular Sectors: 1. Solid-state battery concept showing repeated activity The solid-state battery concept is showing repeated activity, with Fuxin Dare Automotive Parts and Zhejiang Narada Power Source rising by over 10%, followed by Shandong Fengyuan Chemical, Shanghai XFH Technology, Beijing Easpring Material Technology, Yunnan Energy New Material, and other related companies. Review: According to CITIC SEC's research report, solid-state batteries, due to their high safety and high energy density, are expected to kick off a new cycle of electrification innovation. It is estimated that by 2030, global demand for solid-state batteries will reach 643GWh, with a penetration rate of 12.2%, of which the penetration rate of all-solid-state batteries is about 1%, with a total market space of about 1.2 trillion yuan. 2. Agricultural sector rising against the trend In early trading, the agricultural sector rose against the trend, with Hainan Jingliang Holdings hitting its limit up, as well as Hainan Shennong Seed Industry Technology and Shenzhen...Cereals Holdings, Jinjian Cereals Industry, Gansu Yasheng Industrial and other related companies are rising.Review: On the news side, the Ministry of Commerce announced that it will launch an anti-dumping investigation against the import of canola seeds from Canada in accordance with the law. Stimulated by this news, the main contracts of rapeseed meal, rapeseed, and rapeseed oil on the Zhengzhou Commodity Exchange continued their strong performance from yesterday, all rising by over 2% in early trading today. 3. Insurance stocks show strength amid volatility Insurance stocks show strength amid volatility, with Hubei Biocause Pharmaceutical hitting the limit up, and China Pacific Insurance, China Life Insurance, The People's Insurance, Ping An Insurance, and others following suit. Review: Dongguan Securities analyst Wu Xiaotong believes that the recent strong performance of A-share insurance sector is mainly due to the better-than-expected performance growth of listed insurance companies. Significant improvement in investment income compared to the same period last year is the core factor driving the growth of net profits of listed insurance companies this year. Against the backdrop of declining long-term interest rates and increased stock market volatility in the first half of the year, various insurance companies actively increased their allocation of long-term interest rate bonds and equity assets, increased allocation to high-dividend assets, and under the low base effect, the bull market in the bond market and the strong performance of high-dividend sector drove insurance companies to achieve high growth in investment income. 4. Setback for AI hardware sector The AI hardware sector opened lower, with copper high-speed connection, CPO, and other directions leading the decline. Shenyu Communication Technology Inc. fell by over 10%, while Shenzhen Woer Heat-shrinkable Material, Zhongji Innolight, Suzhou TFC Optical Communication, Eoptolink Technology Inc., and others opened lower by over 5%. Review: On the news side, the US escalated its anti-monopoly investigation in the AI computing field, with reports that Nvidia received a subpoena from the Department of Justice. This move signifies a step forward towards formal charges by the US government. Nvidia fell by over 9% on Tuesday, marking its biggest single-day decline since late April. This article is reprinted from "Tencent Stock Selection"; GMTEight Editor: Wang Qiujia.