A-share market closing review | Shanghai Composite Index barely holds above 3200 points, trading volume hits a new low! The consumer sector continues to decline.

On January 6, the market fluctuated in the afternoon with a small decline in the three major indexes. By the closing bell, the Shanghai Composite Index fell by 0.14%, the Shenzhen Component Index fell by 0.12%, and the ChiNext Index fell by 0.09%. Over 2900 individual stocks in the market fell; the total turnover for the day was 1.06 trillion yuan, hitting a new low, with a decrease of 209.8 billion yuan compared to the previous day. In terms of market performance, the hotspots were still mixed. Pharmaceutical stocks were strong throughout the day, with influenza, weight loss drugs, and traditional Chinese medicine all showing strength. Small metals, rare earths, coal, and steel stocks fluctuated upwards, with some activity in mining concept stocks. In addition, wind power, complete vehicles, and optical module sectors all saw some upward movement. On the downside, the number of stocks hitting the limit or experiencing significant declines increased in the afternoon, reaching recent highs. The consumer sector experienced a significant pullback, with retail, community group purchases, duty-free shops, and liquor companies all declining. AI eyeglass stocks were adjusting, with multiple stocks such as BOE HC SemiTek Corporation and Foshan NationStar Optoelectronics hitting the limit. The insurance and internet finance sectors in the broader financial industry fluctuated lower, while the ST sector continued to decline in the afternoon, with more than 20 stocks hitting the limit. In terms of main capital flows, funds favored traditional Chinese medicine, small metals, and photovoltaic equipment industries, while funds fled from the semiconductor, optoelectronics, and liquor industries. Institutional Views Looking ahead, China Securities Co., Ltd. released a research report stating that the underlying logic of the bull market remains intact, and the reversal of deflationary targets remains clear. If policy measures are implemented substantively in the future, the market is expected to stabilize and launch an offensive, providing a buying opportunity during corrections. Haitong: Historical year-end and early-year value in the market. Historically, the market has favored value styles at the end of the year and the beginning of the year, driven by policy and funding catalysts. From a calendar effect standpoint, the market and value styles often perform well at the end of the year and the beginning of the year. In terms of the growth/value style, using the SSE 50 Index as a representative of the value index and the ChiNext Index as a representative of the growth index, it has been observed that since 2010, the SSE 50 Index has outperformed the ChiNext Index during the year-end and early-year period with a probability of 70% and an average excess return of 5.6 percentage points. In terms of the large/small cap style, using the CSI 300 as a representative of the large cap index and the CSI 1000 as a representative of the small cap index, it has been observed that since 2005, the CSI 300 has outperformed the CSI 1000 during the year-end and early-year period with a probability of 70% and an average excess return of 4 percentage points. China Securities Co., Ltd.: Short-term pullbacks bring opportunities, medium-term bull market remains unchanged China Securities Co., Ltd. released a research report stating that due to micro liquidity, exchange rate adjustments, policy vacuum, earnings forecasts, and uncertainty brought by Trump, the short-term market performance may be weaker than expected. The underlying logic of the bull market remains intact, and the reversal of deflationary targets remains clear. While Trump 2.0 has brought uncertainty, external factors are secondary contradictions that affect the pace, but not the trend. From the perspective of the financial markets, since the Trump administration, US bond yields have reached high levels, and have adequately reflected future inflation and optimistic fundamental expectations; Hong Kong stocks and Chinese concept stocks have remained stable this week, and there are currently no sufficient fundamental reasons prompting a continued correction in A-shares. Moreover, domestic policies are still worth anticipating. The central bank's fourth-quarter meeting signals for timely interest rate cuts and reserve requirement cuts, as well as the "two highs and two news" policy adjustments. If substantive policy measures are implemented in the future, the market is expected to stabilize and launch an offensive, providing a buying opportunity during corrections. Industries to watch include electronics, communications, non-ferrous metals, non-banking financials, banks, construction, and food. Popular sectors 1. Strong performance in pharmaceutical stocks Pharmaceutical stocks were strong throughout the day, with influenza, weight loss drugs, traditional Chinese medicine, etc., all showing strength. Over 10 stocks, including Sichuan Goldstone, North China Pharmaceutical, Xinjiang Bai Hua Cun Pharma Tech, and Shandong Lukang Pharmaceutical, hit the limit. Comment: Recently, there has been a high incidence of influenza. According to the latest data from the Chinese Center for Disease Control and Prevention, the positivity rate for influenza viruses is continuously rising, with over 99% being influenza A. 2. Cyclical stocks fluctuating upwards Small metals, rare earths, coal, steel, and other cyclical stocks were fluctuating upwards, with companies like Wolong Resources Group and Maanshan Iron & Steel hitting the limit. Comment: CICC's outlook indicates that, although geopolitical tensions are increasing, global supply and demand improvements and low inventory levels are expected to further boost small metal prices, with improved company profitability and growth prospects. The attractiveness of valuations is becoming more prominent, and there is significant value in the industry's leading players. 3. Continued pullback in the consumer sector The consumer sector experienced a significant pullback, with retail, community group purchases, duty-free shops, liquor companies, etc., all declining. Companies such as Fujian Dongbai, Xinjiang Youhao(Group)Co.,Ltd., Haoxiangni Health Food, and Zhongbai Holdings Group hit the limit.