A-share market review | The ChiNext Index fell by 3.99% on high volume, while the Science and Technology Innovation 50 Index dropped by over 4%! Leading technology companies all experienced declines.

On October 14th, A-shares opened high and fell back, with popular technology concepts across the board experiencing declines. More than 3500 stocks in the market were in the red, with a total trading volume of 2.58 trillion yuan for the day, an increase of 221.5 billion yuan from the previous trading day. At the close, the Shanghai Composite Index fell by 0.62%, the Shenzhen Component Index fell by 2.54%, the ChiNext Index fell by 3.99%, and the Sci-Tech Innovation 50 Index fell by 4.26%. According to analysis from EB SECURITIES, in the short term, the market may enter a period of wide fluctuations. On one hand, after the previous rise, market valuations are relatively high in recent years, and some funds are relatively cautious. Combined with continued uncertainties in US-China relations, market risk preferences may decline. On the other hand, the upcoming Fourth Plenary Session of the 20th CPC Central Committee may increase market policy expectations, coupled with the possibility of further interest rate cuts by the Federal Reserve within the year, which may provide support to the market. Therefore, with multiple factors at play, the market may enter a period of wide fluctuations in the short term. In terms of industry allocation, attention may be focused on high dividend and consumer sectors in the short term, and on TMT and advanced manufacturing sectors in the medium term. In terms of market performance, there was a shift in market style, with technology stocks undergoing significant corrections. Leading stocks such as Zhongji Innolight, Semiconductor Manufacturing International Corporation, Cambricon Technologies, Hua Hong Semiconductor all experienced declines. In terms of sectors, semiconductor, computing power, consumer electronics, and humanoid Siasun Robot & Automation were among the top decliners, while energy metals and non-ferrous metals sectors experienced significant declines, with Ganzhou Teng Yuan Cobalt New Material falling by over 11%. Amid the market downturn, high dividend sectors such as insurance, banking, and coal rebounded, with New China Life Insurance up by over 5%, and Henan Dayou Energy hitting the limit up; the Baijiu (white liquor), tourism, and other major consumer sectors strengthened, with Kuaijishan Shaoxing Rice Wine hitting the limit up; port and shipping stocks rallied in the afternoon, with Nanjing Port hitting the limit up; the photovoltaic sector surged and then pulled back, with LONGi Green Energy Technology hitting the limit up at one point. In terms of spotlighted individual stocks, Wingtech Technology has been limit down for two consecutive days. In terms of news, Wingtech Technology's subsidiary, PureWafer Semiconductor, has recently been subject to dual controls by the Dutch government and the courts, leading to the temporary loss of control over PureWafer Semiconductor by the company. Looking ahead, Guotai Haitong believes that while there may be geopolitical impacts and adjustments, they will not last long and will be manageable, making it a good time to increase holdings in China. The style will not change, focusing on industrial development, anti-"involution" and stable value, with emerging technologies as the main theme and cyclical finance as a dark horse. **Popular Sectors** 1. **Baijiu Sector Strengthens** The Baijiu, tourism, and other major consumer sectors strengthened, with Kuaijishan Shaoxing Rice Wine hitting the limit up, and Jiugui Liquor, Shede Spirits, Luzhou Laojiao following suit. **Comment:** On October 13th, well-known investor Duan Yongping once again posted on social media saying "I bought some Maotai today," sparking market discussions. Open Source Securities stated that the current Baijiu market has shown signs of bottoming out in terms of sales, with negative factors such as high social inventories and fluctuating consumption environment already released. The improvement in sales has certainty, and if liquor companies continue to optimize their sales strategies, they are expected to see an accelerating recovery. 2. **Port and Shipping Stocks Surge** The port and shipping sectors rallied in the afternoon against the trend, with Nanjing Port hitting two consecutive limit up, and Ningbo Marine, Hainan Strait Shipping, Ningbo Ocean Shipping, GH SHIPPING following suit. **Comment:** The Ministry of Transport, in conjunction with the Ministry of Industry and Information Technology and other departments, is conducting an investigation on the potential impact of the US Section 301 investigation on China's shipping, shipbuilding and related industrial chain supply chain security and development interests. The investigation will focus on whether related enterprises, organizations, or individuals have engaged in, assisted, or supported discriminatory measures taken by the United States in the shipping, shipbuilding, and related industrial chain supply chain against China, among other related issues. 3. **PV Sector Rebounds** PV and other new energy stocks surged at one point, with EGing Photovoltaic Technology, Shanghai Yaohua Pilkington Glass Group, Foran Energy Group hitting the limit up, and LONGi Green Energy Technology hitting the limit up at one point. **Comment:** According to a report by the People's Finance News, market rumors indicate that the photovoltaic industry association held a three-day meeting in Beijing this week (from Tuesday to Thursday). The rumors highlighted phrases such as "internal confidentiality" and "joint efforts of six ministries." In response, a representative of the photovoltaic industry association stated that it was a monthly meeting of the association. Guotai Haitong believes that the continuous positive catalysts in policies, demand, and performance in the photovoltaic sector will lead to price increases in the industry chain, driving gradual improvement in fundamentals and potentially reversing the difficulties in the overall photovoltaic sector. **Institutional Views** 1. **Guotai Haitong:** Geopolitical impacts and adjustments are inevitable, but will not last long Guotai Haitong stated that unlike the impact in April, the boundaries of current trade risks are relatively clear, and domestic financial stability conditions are also clearer. Therefore, external impacts are disturbances that will not end the trend. Investments should see the inherent certainty of China's "transformation bull" trend: the acceleration of China's transformation, sinking of risk-free returns, and capital market reforms. Geopolitical impacts and adjustments are inevitable, but will not last long and will be manageable, making it a good time to increase holdings in China. Geopolitical and economic situations are complex, and sectors that are easy to falsify in terms of data and policy are not good choices. Consequently, Guotai Haitong believes that the style will not change, focusing on industrial development, anti-"involution" and stable value, with emerging technologies as the main theme and cyclical finance as a dark horse. 2. **EB SECURITIES:** Multiple factors interweave, market may enter a period of wide fluctuations in the short term EB SECURITIES stated that in the short term, the market may enter a period of wide fluctuations. On one hand, after the previous rise, market valuations are relatively high in recent years, and some funds are relatively cautious. Combined with continued uncertainties in US-China relations, market risk preferences may decline. On the other hand, the upcoming Fourth Plenary Session of the 20th CPC Central Committee may increase market policy expectations, coupled with the possibility of further interest rate cuts by the Federal Reserve within the year, which may provide support to the market. Therefore, with multiple factors at play, the market may enter a period of wide fluctuations in the short term. In terms of industry allocation, attention may be focused on high dividend and consumer sectors in the short term, and on TMT and advanced manufacturing sectors in the medium term. 3. **Orient:** Market may experience fluctuations, but will not change the upward trend Orient believes that relatively speaking, the impact of the current trade war is weaker than expected, but there may still be fluctuations in the future, which may delay the time for the recovery to resume, but will not change the upward trend. Looking at the fourth quarter, the accelerated restructuring of the RMB order will continue to be reappraised, the policy planning for the "15th Five-Year Plan" is imminent, important technology industries are facing breakthroughs, all of which make this round of market conditions conducive to a "slow bull" trend. Considering that the Shanghai Composite Index has fallen back into the consolidation range, if there is a forced upward push in the future, it would be an opportunity to reduce holdings. Conversely, if short-term adjustments occur due to irrational emotions, it would provide a good opportunity to participate, with a focus on technology and non-ferrous metals as key areas of participation. This article was reprinted from "Tencent Stock Picks", GMTEight, edited by Li Fo.