A-share market closing review | Strong rebound! The ChiNext Index rose by 0.77%, with major themes in the consumer and pharmaceutical sectors surging.

May 20th, A-shares rebounded strongly, with the BSE 50 index reaching a historic high. By the end of the day, the Shanghai Composite Index rose by 0.38%, the Shenzhen Component Index rose by 0.77%, and the ChiNext Index rose by 0.77%. It is worth noting that the market focus is mainly on the large consumer and pharmaceutical sectors. Recent developments include: In the consumer sector, with continued efforts to promote consumption combined with the boost from the "618" promotion, the consumer sector has strengthened collectively. Zhonghang Securities believes that in the short to medium term, the "618" promotion activities and optimized brand promotion strategies constitute a trading catalyst. In addition, 3SBIO and Pfizer reached a sky-high $6 billion authorization cooperation, setting a new record in the Chinese innovative drug BD transaction, according to the Securities Times. Industry insiders have stated that the cooperation between domestic innovative drug companies and Pfizer has exceeded expectations in terms of initial payments and sales milestone payments. Innovative drug companies that already have assets going global or have the ability to go global are expected to receive market attention. On the market, the consumer sector surged, with food and beverage, beauty care, pet economy sectors leading the gains. Shanghai Lily&Beauty Cosmetics surged for four consecutive days, while stocks such as Hangzhou Tianyuan Pet Products and Beingmate Co., Ltd hit the limit-up. Pharmaceutical stocks also rose collectively, with traditional Chinese medicine and innovative drugs leading the gains. Stocks like ApicHope Pharmaceutical Group hit the limit-up. The ST sector continued to see a surge in limit-up stocks, with over 20 stocks hitting the limit-up. The merger and restructuring concept continued to strengthen, with companies like Jinlihua Electric surging with two consecutive limit-ups, as well as Hydsoft Technology hitting the limit-up. Some high-priced stocks rebounded in the afternoon, with Suzhou Longjie Special Fiber hitting the "limit-up". On the downside, sectors like port shipping, defense, real estate, and major financials saw larger declines. Looking ahead, Huaxi points out that A-shares are expected to continue to trend steadily upwards in a volatile manner. In terms of industry allocation, it is recommended to moderately balance and focus on public utilities, innovative drugs, and "new consumption" related sectors. In terms of themes, it is recommended to focus on defense industry, autonomous controllable technology, and merger and restructuring. Popular sectors: 1. Consumer sector booming again Consumer stocks surged again, with beauty care, pet economy, and other sectors leading the gains. Stocks like Shanghai Lily&Beauty Cosmetics, Lafang Jiahua, Beingmate Co., Ltd, Hunan Friendship & Apollo Commercial, and Sichuan Langsha Holding hit the limit-up. Commentary: Open Source Securities suggests that the 2025 "618" activities are expected to introduce more direct discounts and price reductions. These measures make it easier for users to see the post-discount prices and highlights the selling points of products. Therefore, pet food brands with popular products are expected to benefit directly. 2. Pharmaceutical stocks collectively rise Pharmaceutical stocks collectively rose, with innovative drugs leading the gains. Stocks like ApicHope Pharmaceutical Group, Sunshine Guojian Pharmaceutical, Jilin Yatai, and Zhejiang Huahai Pharmaceutical hit the limit-up. Commentary: In terms of news, the $6 billion authorization cooperation between 3SBIO and Pfizer set a new record for BD transactions in Chinese innovative drugs. According to Zhongyin International analysis, positive factors such as the overseas transactions of innovative drugs, optimization of domestic centralized procurement policies, landing of innovative drug type B medical insurance catalogs, recovery of medical equipment tenders, and domestic demand recovery are expected to drive the pharmaceutical industry to continue to see valuation restoration in 2025. 3. Merger and restructuring concepts are active Merger and restructuring concepts are active, with companies like Jinlihua Electric, Hydsoft Technology, Tianjin Motor Dies, Jiangsu Zongyi, Kunwu Jiuding Investment Holdings, Beijing Airport High-Tech Park hitting the limit-up. Commentary: Shenwan Hongyuan Group points out that the revision of the "Reorganization Measures" is mainly aimed at further loosening the policy on mergers and restructuring, encouraging high-quality companies to grow and strengthen through mergers and restructuring. This is expected to further accelerate the optimization of resource allocation in the capital market and enhance market confidence. Institutional viewpoints: 1. Huaxi: A-shares may continue the "steady progress" trend Huaxi points out that looking ahead, A-shares are expected to continue in a trend of fluctuating steadily upwards, with policies supporting stable and active capital markets leading to continuous upward movement of the index. For example, the third batch of insurance capital long-term investment pilot projects, reform of mutual fund management fee collection models, and new arrangements for listed companies' mergers and restructuring are all beneficial for injecting incremental funds into A-shares and improving market activity. In terms of industry allocation, it is recommended to have a moderately balanced configuration and focus on public utilities, innovative drugs, and "new consumption" related sectors. In terms of themes, it is recommended to focus on defense industry, autonomous controllable technology, and merger and restructuring. 2. Zhongtai: Market indices may maintain strong resilience Zhongtai points out that the suspension of "equal tariffs" exceeded expectations, strengthening short-term risk appetite. Structural divergences still exist, and there is limited space for reducing tariffs in the medium to long term. From the current market environment, continuous strengthening of total policy determination, improvement of core urban housing markets, historical high margin trading scales and export resilience brought by the "grab trade" trade, coupled with policy attention to the index, are expected to help the market indices maintain strong resilience. Fund flows are expected to rotate around high first quarter business sentiment and mid-term industrial trends. 3. Orient: A-shares may still maintain a volatile upward trend Orient,statusIt is also worth mentioning that there were surges in other aspects such as Jinlihua Electric and Hydsoft Technology due to merger and acquisitions.The nt pointed out that, overall, the A-shares are still maintaining a volatile upward trend, with policies to stabilize and activate the capital market helping the index continuously move higher. The market-oriented policies introduced recently are all conducive to enhancing market activity, and thematic stocks are still the main focus of the market. The "Six Measures for Mergers and Acquisitions" have been fully implemented, which is expected to further enhance the activity of the mergers and acquisitions market. According to previous statistics, the integration of central SOEs and mergers and acquisitions in high-tech industries have gradually become the two core themes of this wave of mergers and acquisitions. In addition, the military industry heat has once again risen, with a continuous stream of positive news over the weekend. After a sharp rise in the first week of May, this sector experienced a certain degree of adjustment last week. With subsequent orders gradually stabilizing and military trade continuing to fulfill, the military industry market is expected to stabilize gradually and continue to rise. It is recommended to continue to increase industry focus.This article is reproduced from "Tencent Self-selecting Stocks", edited by GMTEight: Li Fo.