A-share midday report | The ChiNext Index fell by 2.77%, with over 4800 stocks declining. Stocks in sectors such as computing power, securities, etc., posted larger declines.

On January 8th, the three major A-share indices opened lower and continued to fall. By the close, the Shanghai Composite Index fell by 1.46%, the Shenzhen Component Index fell by 2.38%, and the ChiNext Index fell by 2.77%. Over 4800 stocks in the entire market experienced a decline. In terms of the market, only a few sectors like port and shipping, and brain-computer interface showed gains. On the other hand, sectors like high-speed connection cables, computing power, securities, and rare earth permanent magnets experienced significant declines. In terms of fund flow, funds favored industries like shipping ports, medical services, and precious metals. Funds flowed out of industries like semiconductors, consumer electronics, and power grid equipment. Institutional Views: Looking ahead, EB SECURITIES believes that despite short-term market preferences for marginal rebounds, small-cap growth stocks may see a oversold recovery. EB SECURITIES: If the market favors marginal rebounds in the short term, small-cap growth stocks may see oversold recovery. EB SECURITIES believes that policies continue to be the core contradiction supporting market operations. Both the monetary policy meeting in the fourth quarter of 2024 and the work conference in 2025 mentioned "easing reserve requirement ratios and interest rates at the appropriate time." Given that the first quarter is traditionally a peak season for credit and combined with factors like tax peaks, it is expected that the central bank may implement reserve requirement cuts before the Spring Festival to support market liquidity. The expected loosening of domestic policies and stable exchange rates will provide strong support for A-share markets to withstand external risks. Under this background, the risk of a further irrational sell-off in the market is not large. After a wave of panic sentiment has been released, short-term adjustments are expected to be near the end, and investors can wait for the index to stabilize. In terms of allocation, if the market favors marginal rebounds in the short term, small-cap growth stocks may see oversold recovery, focusing on directions like AI, semiconductors, etc. Continuous expansion of domestic demand policies, and large consumption remains a relatively certain direction, such as retail trade, movie theaters, ice and snow economy, tourism and hotels, etc. In the low-interest rate environment, the value of dividend sectors like electricity and public utilities is highlighted. Orient: The market's volatile upward trend remains unchanged, and technological innovation will be a short-term hot topic. Orient pointed out that the negative impact of external disturbances on the market is gradually fading, and short-term investors' risk appetite is decreasing. The market has temporarily found some relief, and the major indices are expected to build short-term bottoms. However, in the medium to long term, the market's volatile upward trend remains unchanged, and themes related to technological innovation that are autonomous and in line with the requirements of new productive forces will be short-term hot topics. Hot Sectors: 1. Brain-Computer Interface Rises The concept of brain-computer interface rapidly rose, with Innovative Medical Management hitting the limit up, Nanjing Panda Electronics rising by over 6%, and Hanwei Electronics Group Corporation and PKU HealthCare Corp. following with minor gains. Commentary: Soochow predicts that with rapid technological iterations, companies related to brain-computer interfaces will continue to make breakthroughs in technology and the market. 2. Securities Stocks Shake Lower Securities stocks shook lower, with Guosheng Financial Holding Inc. falling by over 5%, and Harbin Hatou Investment, Hongta, Guolian, Tianfeng, and Capital falling by over 3%. This article was reprinted from "Tencent Self-selecting Stocks"; GMTEight Editor: Wang Qiujia.