A-share midday review | the ChiNext Index fell by 0.94% in half a day, military stocks, and Siasun Robot & Automation concept stocks rose against the trend, and the solid-state battery sector fell sharply.

On March 4th, the A-share market opened weak and volatile, with the Shanghai Composite Index briefly falling below 3300 points during the morning session. The market turnover was 852.8 billion yuan in the morning, a decrease of 210.7 billion from the previous day. By midday, the Shanghai Composite Index was down 0.01%, the Shenzhen Component Index was down 0.15%, and the ChiNext Index was down 0.94%. In a reversal of the market trend, Siasun Robot & Automation sector saw a surge in limit-up stocks, with Zhejiang Tengen Electric hitting its fourth consecutive limit-up. More than ten stocks including Shenzhen Zhaowei Machinery & Electronics and Zhejiang Wanma also hit the limit-up. The defense industry sector rose, with stocks like Beijing Emerging Eastern Aviation Equipment and Chengdu Lihang Technology also hitting the limit-up. AI application sector was active, with ERP leading the gains, and Beijing Join-cheer Software hitting the limit-up. In addition, sectors like precious metals, consumer electronics, and auto parts were among the top gainers. On the downside, the solid state battery sector saw a sharp pullback, consumer staples continued to decline, and dairy products led the losses. In terms of individual stocks, two newly listed stocks saw large gains, both triggering a second trading halt. N Changyou had a maximum gain of 344.49%, potentially yielding over 50,000 yuan profit for a lot of 500 shares. N Huitong saw a maximum gain of 220.93%, potentially yielding over 26,000 yuan profit for a lot of 500 shares. N Huitong is a leading supplier of automotive styling components in the country. In terms of fund flows, main capital flowed into sectors like auto parts, aviation equipment, automation equipment, general equipment, optical electronics, while flowing out of sectors like batteries, semiconductors, liquor, telecom services, general retail. Institutional Views: Looking ahead, Huaan believes that the market will continue to fluctuate at high levels, with a focus on sector rotation. 1. Huaan: The spring rally is coming to an end Huaan believes that the spring rally is coming to an end, and they advise focusing on three main sectors for potential rotation: 1) Infrastructure-related sectors with strong seasonal effects before mid-March. This includes engineering consulting services, environmental protection equipment, non-metal materials, cement, general equipment, etc. 2) Sectors with policy support, such as pharmaceuticals, automobiles, and home appliances. 3) Banking and insurance sectors with short-term value and long-term strategic value. 2. Orient: Technology sector remains the main investment focus Orient believes that in the short term, the technology sector is undergoing a correction after a rapid rise, and the focus is shifting to specific sub-sectors within the new energy sector. In the coming month, policy support will boost related industries, but technology sectors led by AI will remain the main investment focus. 3. Huatai: Market may see a change in dynamics in the short term Huatai believes that there is a need for adjustment in the technology sector, both technically and emotionally, and the market structure needs to be rebalanced. However, considering the triggers and policy catalysts for the recent rise in Chinese tech stocks, any correction is temporary and a reversal is expected. Looking ahead to March, A-share market may see a change in dynamics in the short term, with undervalued stocks potentially seeing gains. Their strategy is to focus on technology sectors and areas with imminent performance. Hot Sectors: 1. Siasun Robot & Automation rebounded Stocks related to Siasun Robot & Automation saw a rebound, with Zhejiang Tengen Electric hitting its fourth consecutive limit-up. Other stocks like Shenzhen Zhaowei Machinery & Electronics, Zhejiang Wanma, Tianrun Industry Technology, Jwipc Technology, and others also hit the limit-up. Comment: In terms of news, Shenzhen issued the "Shenzhen Intelligent Manufacturing Technology Innovation Action Plan (2025-2027)", supporting key technologies in intelligent manufacturing and automation. CITIC SEC stated that the development trend of humanlike robot industry is clear, and it is expected to see a new round of catalytic period by 2025. 2. AI application sector saw gains The AI application sector saw gains, with ERP leading the way, Beijing Join-cheer Software hitting the limit-up, and other related stocks following suit. Comment: China Securities Co.,Ltd. report mentioned that DeepSeek publicized profit cost rates, with a theoretical cost rate of up to 545%, and model manufacturers achieving profitability. In terms of industry demand, model costs were high.Both downstream and upstream have great potential for growth, which is expected to accelerate the release of AI demand in downstream applications.This article is reproduced from "Tencent Select Stocks", edited by GMTEight: Wang Qiujia.