A-share closing review | Three major factors suppressing! Sci-tech innovation 50 index fell nearly 2%, and battery concept stocks rose against the trend at the end of the trading day.

On May 9, A-shares experienced a volatile adjustment, with over 4000 stocks falling, and the dividend style bucking the trend to support the market. The semiconductor sector plummeted significantly, with the Sci-Tech Innovation 50 Index falling by nearly 2%. The total turnover for the day was 1.19 trillion, a decrease of 101.4 billion from the previous trading day. By the close of trading, the Shanghai Composite Index fell by 0.30%, the Shenzhen Component Index fell by 0.69%, and the ChiNext Index fell by 0.87%. Market analysis believes that the index's correction may be related to three factors: 1. Negative news in the semiconductor sector, as some market participants are concerned about Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor's first-quarter reports showing that major funds have reduced their holdings. However, neither of these companies has issued any announcements regarding selling A-shares. 2. After multiple risk warnings, high-priced stocks collectively corrected, with Guizhou Zhongyida hitting the limit down, and stocks like Guangdong Kitech New Material Holding, and Hongbaoli Group Corporation falling, profit-taking behavior may trigger a chain reaction and worsen market sentiment. 3. Uncertainty surrounding tariffs remains strong, as Minsheng Securities pointed out that while there are signs of easing in US-China trade tensions, lack of substantial progress in trade negotiations between the US and Japan and the US and Europe could be potential triggers for increased market volatility. On the market front, dividend stocks like banks and utilities bucked the trend, with China Construction Bank Corporation reaching new highs and stocks like Jinneng Holding Shanxi Electric Power hitting the limit up. The consumer goods sector was active, with textile and food and beverage stocks leading the rally, and Huafang Co.,Ltd. rising for four consecutive sessions. Defense stocks were also active, with stocks like Chengdu Tianjian Technology and Chengdu Leejun Industrial rising for three consecutive sessions. ST-stocks continued to perform well, with Cedar Development and over 30 other stocks hitting the limit up. Solid-state battery concept stocks surged at the close, with Gotion High-tech hitting the limit up momentarily. On the downside, chip stocks fluctuated downward, with Hua Hong Semiconductor falling by over 9%, and many high-priced stocks taking a hit. Additionally, retail and consumer electronics sectors led the decline. Looking ahead, CMSC points out that overall, the market is expected to witness a pattern of "rebound in weighted indices and active growth in technology" in May. In terms of style, a focus on technology and mid-cap styles may make a comeback. Hot Sectors: 1. Active consumer goods sector Consumer goods stocks were active against the market trend, with textile and food and beverage stocks leading the way, and Huafang Co.,Ltd. rising for four consecutive sessions, along with stocks like Anhui Huamao Textile and Zhejiang Yingfeng Technology hitting the limit up. Analysis: On the news front, the Ministry of Industry and Information Technology and the Ministry of Commerce issued a notice regarding the promotion of upgrading activities in the textile and apparel sectors by 2024. The activities will focus on promoting advanced and applicable technologies, digital transformation, technological innovation, cost reduction and efficiency improvement, green development, among others, to innovate the consumer scenes of textile and apparel, develop new formats and models like live broadcast e-commerce, and promote linkages such as Wuxi Online Offline Communication Information Technology Co., Ltd. 2. Chip sector downturn Chip stocks fluctuated downward, with Hua Hong Semiconductor falling by over 9%, and stocks like Espressif Systems, Semiconductor Manufacturing International Corporation, Shanghai V-Test Semiconductor Tech., Verisilicon Microelectronics (Shanghai) Co., Ltd. following suit. Analysis: On the news front, the two domestic semiconductor giants, Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, disclosed their first-quarter reports. Semiconductor Manufacturing International Corporation's first-quarter net profit increased by 167% year-on-year, with an expected 4-6% decline in revenue in the second quarter; while Hua Hong Semiconductor saw an increase in revenue but a decline in net profit by 89.73%. At the same time, major funds reduced their holdings in the two companies in the first quarter. 3. Power sector surge The power sector surged against the trend, with Jinneng Holding Shanxi Electric Power and Huaihe Energy hitting the limit up, and stocks like Harbin Jiuzhou Group, Hangzhou Cogeneration Group, and Henan Yuneng Holdings following suit. Analysis: GF SEC released a research report stating that the power sector has entered a phase of resonance between performance realization and reform dividends, with the deepening of low valuation properties and market value management, significantly increasing the industry's allocation value. Institutional Views: 1. CMSC: May is expected to see a pattern of "rebound in weighted indices and active growth in technology" CMSC points out that in May, after the end of the earnings disclosure period, the market will actively position investment targets in industries with improved performance. After entering a period of performance vacuum, ShenThe trend of Zhen New Industries Biomedical Engineering is booming, and industrial trend investing and thematic investing are expected to make a comeback in the current environment. With the role of China Investment Corporation playing a role similar to a "stabilization fund", there is little room for the market to adjust downward, which will strengthen risk appetite and financing balances are expected to return. Overall, the market is expected to show a pattern of "weight index rebound, technology growth active" in May, with a focus on technology and mid-cap styles expected to return.2. Minsheng Securities: Chinese assets may still be the more cost-effective assets Minsheng Securities pointed out that signs of easing in the US-China trade friction have emerged, but trade negotiations between the US and Japan, the US and Europe, etc., still have not made substantial progress, potentially leading to increased market volatility. However, whether there is a temporary easing or an escalation of trade friction, Chinese assets may still be the more cost-effective assets. Of course, the resilience of the fundamentals also implies doubts about the sustainability of the easing measures and a structural shift in market game funds. The recovery of Chinese assets does not mean a universal rise in the entire market. The construction of domestic demand and the reshaping of the global economic order remain important forces. Areas to focus on: firstly, the consumer industry benefiting from Chinese demand construction; secondly, recommended resources, capital goods; thirdly, to cope with potential external shocks, undervalued financials (banks, insurance), coal with internal physical consumption + dividends. 3. Orient: Pan-technology remains an important investment direction in the market Orient pointed out that overall, with policy support, the market continues to maintain an upward trend, with the Shanghai Composite Index having completely filled the "tariff gap", in line with previous predictions in this column, and major indexes in the Shenzhen market are also expected to catch up. Pan-technology remains an important investment direction in the market. In addition, the military industry sector has seen continuous growth due to the India-Pakistan conflict, and this year the world's outlook remains uncertain. With technology continuously advancing, the cost-effectiveness of Chinese military products has become apparent, and more foreign trade models are expected to enter overseas markets. The overall military trade market has a large growth space, and there is potential for incremental growth in the industry to support military trade companies in the future. This article is a reprint from "Tencent Self-selected Stocks", edited by Jiang Yuanhua.