A-shares closing review | Three major factors boost! A-shares opened low and rose, Sci-Tech 50 closed up 1.4%, non-ferrous sector surged.

On October 13th, the A-shares opened low and closed high. By the end of the trading day, the Shanghai Composite Index fell by 0.19%, the Shenzhen Component Index fell by 0.93%, the Growth Enterprise Index fell by 1.11%, and the Science and Technology Innovation 50 Index rose by 1.4%. It is worth noting that, according to Securities China, some private equity professionals believe that if there are no major changes, the adjustment should end within two trading days. Firstly, after the market closed on October 10th, many securities firms made adjustments to the securities eligible for margin and the conversion rate, which took effect starting on October 13th. This to some extent offset the negative news in the market from last Friday. Secondly, structural opportunities still exist in the entire market. Apart from rare earths and seed industries, nuclear power and military industry rose again this morning. In addition, the cycle of artificial intelligence is just beginning, and after the adjustment, the valuations are more reasonable. Thirdly, from an external market perspective, this morning, the performance of US stock index futures was strong, with the Nasdaq rebounding by nearly 2%, and the virtual currency market, which plummeted last Friday, rebounded across the board. This is a significant difference compared to the indiscriminate sell-off of global assets in early April. In terms of trading, the rare earth sector surged against the trend, with more than 10 stocks like China Rare Earth Resources And Technology and China Northern Rare Earth hitting the daily limit; the banking sector strengthened in the afternoon, with Shanghai Pudong Development Bank and Bank Of Nanjing both rising by over 5%; the precious metals sector rose, with Western Region Gold hitting the daily limit; the military industry sector rose, with Anhui Greatwall Military Industry hitting the daily limit for two consecutive days; the semiconductor sector continued to be strong, with Kunshan Kinglai Hygienic Materials and Hunan Kaimeite Gases hitting the daily limit for two consecutive days; in addition, sectors like domestic software, agriculture, and ports all had some performance during the trading day. On the decline side, consumer electronics, automotive industry chain, engineering machinery, and photovoltaics led the decline. In terms of individual stocks, Swancor Advanced Materials Co., Ltd. hit the daily limit down by 20%, with the stock rising nearly 19 times year-to-date. The company announced that, as of now, there are no plans or arrangements for Intelligent Elements Innovation to go public through backdoor listing in the next 36 months. Looking ahead, Huaxi believes that the short-term escalation of Sino-US trade friction is expected to increase market volatility, but the impact of this shock may be far lower than that of April this year. Referring to the industry valuation recovery performance after the last round of tariff impact, anti-tariff, autonomous controllable, and stable assets may have an advantage in the short term, such as dividends, agriculture, military, rare earths, etc. In the medium term, the technological revolution remains the biggest theme. In the slow bull market, funds are expected to focus on the future industry investment of CKH HOLDINGS. Hot sectors 1. The rare earth sector strengthened The rare earth permanent magnet sector strengthened against the trend, with more than 10 stocks like China Rare Earth Resources And Technology, China Northern Rare Earth, Inner Mongolia Baotou Steel Union, Chengdu Galaxy Magnets, Guangzhou Newlife New Material, BGRIMM Technology hitting the daily limit. Comment: In terms of news, Inner Mongolia Baotou Steel Union and China Northern Rare Earth announced on the evening of October 10th that they have increased the transaction prices of rare earth concentrates for the fourth quarter of 2025. Huatai mentioned that it values the strategic position of rare earths and is optimistic about the upward trend in prices. It is expected that the central price of rare earths will continue to rise from 2025 to 2026. In addition, in the context of "de-globalization," the strategic significance of rare earths is becoming more prominent. 2. Semiconductor industry chain rebound The semiconductor industry chain hit bottom and rebounded, with wafer foundries and advanced packaging sectors rising. Hua Hong Semiconductor rose by nearly 14%, while Brite Semiconductor and Hangzhou Silan Microelectronics followed suit. Comment: According to Securities Times, there are three major news items that have received high market attention recently. First, there is the adjustment of the margin conversion rate for Semiconductor Manufacturing International Corporation. Second, the 2025 Bay Area Semiconductor Chip Exhibition (Bay Chip Expo) will be held from October 15th to 17th. Third, the China Securities Regulatory Commission website recently disclosed that the IPO guidance status of Changxin Technology Group Co., Ltd. has changed to "guidance acceptance," marking the end of the company's three-month IPO guidance work. 3. Active domestic software concept Stocks related to the domestic software concept were actively traded against the trend, with Fujian Rongji Software hitting the daily limit, Beijing Kingsoft Office Software, Inc. rising by over 10% at one point, and ArcherMind Technology, Wuhan Dameng Database, Hunan Kylinsec Technology following suit. Comment: According to Securities China, analysts pointed out that the strength of software stocks is closely related to two recent news items. First, the US recently threatened to control the export of key software, which is expected to accelerate the localization process for industrial software and basic software in China. Second, over the weekend, the term "Business Department Announcement Appendix for the First Time Changed to WPS Format" trended on Weibo and sparked discussions among netizens. It is understood that WPS Office is one of the core products under Beijing Kingsoft Office Software, Inc. Institutional Views 1. Huaxi: The impact will be less than that of the April 7th market, "turning point and opportunities" are the theme for October Huaxi believes that the short-term escalation of Sino-US trade friction is expected to increase market volatility, but based on the "learning effect" of the capital market and the enhancement of China's market stability mechanism, the impact of this shock may be far lower than that of April this year. Referring to the industry valuation recovery performance after the last round of tariff impact, anti-tariff, autonomous controllable, and stable assets may have an advantage in the short term, such as dividends, agriculture, military, rare earths, etc. In the medium term, the technological revolution remains the biggest theme. In the slow bull market, funds are expected to focus on the future industry investment of CKH HOLDINGS. 2. China Galaxy: Tariff attacks again, the market is unlikely to replicate the April 7th market China Galaxy believes that with the resurgence of tariffs, the market is unlikely to replicate the market trend of April 7th. In the short term, the increasing uncertainty in the external environment will suppress market risk appetite, along with some profit-taking pressure from funds, which will intensify market volatility and increase individual stock divergences. However, the core factors driving this round of market trends have not changed. Liquidity is expected to continue to improve. During the critical window of the "Fifteenth Five-Year Plan" and the disclosure period for the third quarter financial reports, the focus will be on areas of policy focus and sectors with strong earnings certainty. 3. Sinolink: A-shares may face index-level adjustments, but the magnitude is controllable Sinolink believes that for Chinese assets, the recent rise has been more driven by the rise in overseas technology, which has created vulnerabilities in the short term for A-shares and Hong Kong stocks. A-shares may face index-level adjustments, but the magnitude is controllable. In comparison, it is suggested to seek more opportunities from the perspective of domestic policies ("anti-inward circulation") and the bottoming out of domestic demand. In the medium term, the global rebound in manufacturing activity and the upward trend in physical consumption remain the most important themes. Domestic demand sectors will receive more attention in stages, non-bank financials will benefit from the bottoming out and rebound of returns to social capital, and the medium-term assets of physical asset repair and accelerated investment in manufacturing activity are still the most advantageous assets. This article is reprinted from "Tencent Stock Picks" with GMTEight editor: Jiang Yuanhua.