A-share midday report | GEM Index fell more than 2% in half a day, with nearly 4300 stocks trading in the red. The technology sector continues to decline.

On February 28th, the overnight drop in the US stock market caused NVIDIA to fall by more than 8%. As a result, the A-share market adjusted with reduced volume in the morning session, with the ChiNext and STAR Market leading the decline. Nearly 4300 stocks in the market were trading lower. By the midday close, the Shanghai Composite Index fell by 0.88%, the Shenzhen Component Index fell by 1.37%, the ChiNext Index fell by 2.07%, and the STAR 50 Index fell by 2.51%. According to Chinese securities reports, some analysts pointed out that the drop in Asian stock markets in response to the US stock market is closely related to Trump's tariff policies. US President Trump announced on Thursday that a 25% tariff on Canada and Mexico will take effect on March 4, which negatively impacted market sentiment. On that day, the US dollar index also rose significantly, reflecting an increase in market risk aversion. On the market, technology stocks continued to decline, with Siasun Robot & Automation, computing power industrial chain, semiconductor, and AI glasses among the top decliners. Despite the overall market decline, sectors like liquor and food continued to be active, with Haoxiangni Health Food and Hainan Yedao both hitting their daily limit up for two consecutive days. Oil and gas stocks bucked the trend and traded higher, with Xinjiang Zhundong Petroleum Technology hitting the limit up. The elderly care concept saw a surge in the midday session, with Everjoy Health Group hitting the limit up. In terms of fund flows, main capital inflows were seen in sectors like liquor, minor metals, photovoltaic equipment, housing construction, and energy metals; while outflows were seen in industries like IT services, semiconductors, software development, communication equipment, and general equipment. Institutional viewpoints Looking ahead, EB Securities suggested actively taking advantage of the spring market trends by focusing on the technology and consumer sectors. 1. Cinda: We are currently in the early stages of the second wave of the bull market, and we recommend adding positions on dips Cinda believes that from October 2018 to January 2019, there has been a clear divergence between institutional investors and active trading funds in the stock market. Institutional investors are slightly more cautious, focusing more on profitability and policy effects, while active trading funds are more optimistic, focusing on trading volume and the continuity of local thematic hotspots. Recently, due to the earnings blackout period, better-than-expected US tariff policies, and global investors paying attention to Chinese internet assets through DeepSeek, the sentiment of institutional investors has improved. This improvement could be the early stage of the second wave of the bull market, but it will also face the challenge of funds leaving the market before and after the Two Sessions in March and the verification of Q1 earnings reports in April. However, the overall direction is optimistic. Cinda suggests that investors add positions on dips during several important testing periods. 2. EB Securities: Actively seize the spring market trends by focusing on technology and consumer sectors EB Securities believes that the continuous support of policies and the influx of funds brought about by profit effects are expected to further boost market valuations. Currently, the valuation of the A-share market is near the average since 2010. With the active implementation of policies, medium to long-term funds and incremental funds brought about by previously profitable effects are likely to flow into the market rapidly, potentially further boosting the valuation of the A-share market. In terms of allocation, focus on the technology growth and consumer sectors. For the technology growth sector, focus on industries such as TMT, mechanical equipment, and power equipment with policy mapping effects in the capital market; while for the consumer sector, focus on consumer electronics, social services, and retail trade. 3. Huachuang Securities: Maintain an optimistic view on the overall market, small-cap growth stocks still offer high value Huachuang Securities believes that the current market dilemma lies in whether the AI-related thematic trend has entered a cashing out period tactically. They believe that the recent adjustment during trading hours is just a rebalancing of active funds. Strategically, the triple bottom of policy, valuation, and performance has passed, and they will continue to maintain an optimistic view on the overall market throughout the year. The surplus liquidity brought about by loose monetary policies will have a significant impact on the style rotation of large and small value growth stocks and industries. Historically, during periods of surplus liquidity expansion, small-cap growth stocks have performed better, driven by the four factors of small market cap, high liquidity proportion, high valuation, and high growth. Hot sectors 1. Oil and gas sector rises Oil and gas stocks rose against the trend, with Xinjiang Zhundong Petroleum Technology hitting the limit up, Sino Geophysical rising by over 10%, and other companies like North Huajin Chemical Industries, Beiken Energy Group, Tong Petrotech Corp., and Geo-Jade Petroleum Corporation following suit. Review: In terms of news, Brent crude oil futures for April delivery on the Intercontinental Exchange rose by $1.51, up by 2.08%, closing at $74.04 per barrel. NYMEX WTI crude oil futures for April delivery rose by $1.73, up by 2.52%, closing at $70.35 per barrel. 2. Solid-state battery sector rebounds from the bottom The solid-state battery concept rebounded from the bottom, with Shanghai Emperor of Cleaning Hi-Tech hitting its daily limit up for two consecutive days, Sanxiang Advanced Materials seeing a 2-day limit up, and companies like LINGOOD, Hubei Wanrun New Energy Technology, Grinm Advanced Materials, Guangdong Guanghua Sci-Tech, and Fuxin Dare Automotive Parts leading the gains. Review: Zhongtai stated that as the mass production and installation of solid-state batteries approaches, there are many challenges ahead, with the "solid-liquid price" challenge being significant. Some companies in the lithium battery industry chain saw an increase in their performance in the fourth quarter of last year, and it is expected that there will be a turning point in supply and demand by 2025. The industry is entering a 2-3 year upward cycle. Looking ahead over the next two years, there is a possibility of improvement in both performance and valuation.It belongs to sectors with a good medium-term layout.This article is reprinted from "Tencent Stocks". Edited by GMTEight: Wang Qiujia.