A-share market closing review | A-shares shrink and fluctuate, with a trading volume of less than 2 trillion! Nearly 4200 stocks fell, dividend style is active.

On October 16, the A-share market fluctuated with reduced volume, with a trading volume of less than two trillion. Nearly 4200 stocks were in the red. By the close, the Shanghai Composite Index fell by 0.02%, the Shenzhen Component Index fell by 0.46%, and the ChiNext Index rose by 0.13%. In terms of plate performance, sector rotation was fast, with dividend-paying stocks like banks active, and Agricultural Bank Of China approaching historical highs. The shipping port sector saw another surge, with Fujian Highton Development and others hitting the limit up. The storage chip sector strengthened, with multiple stocks like Shenzhen Techwinsemi Technology hitting the limit up. Pharmaceutical stocks were strong at one point, with multiple stocks like Guizhou Bailing Group Pharmaceutical hitting the limit up. On the downside, high-flying stocks saw adjustments, with controllable nuclear fusion weakening, as Hefei Metalforming Intelligent Manufacturing and China Nuclear Engineering Corporation both taking a big hit. Siasun Robot & Automation sector showed weakness, with Wanxiang Qianchao and Zhejiang XCC Group stocks weakening. Metals, wind power, and engineering machinery sectors saw the biggest declines. Looking ahead, Orient believes that after experiencing external negative disturbances in the short term, the market has somewhat recovered, and there is a high probability of the stock index continuing to rebound. The Shanghai Composite Index is expected to steadily move towards four thousand points, and big technology companies remain the mainstream in terms of allocation. The pharmaceutical sector and consumer staples, which have undergone significant adjustments, currently offer good value for investors. Popular Sectors: 1. Pharmaceutical stocks were strong at one point Innovative drugs, traditional Chinese medicine, and other pharmaceutical stocks were strong at one point, with multiple stocks like Guizhou Bailing Group Pharmaceutical, Luoxin Pharmaceuticals Group Stock, and Zhejiang Yatai Pharmaceutical hitting the limit up. Review: The industry has several catalysts, including the European Society for Medical Oncology (ESMO) meeting scheduled from October 17 to 21. Breakthrough data is expected to be announced during the meeting. Additionally, BD transactions are entering the traditional peak season, and the strong performance expectations brought about by innovative drugs are attractive. Industrial believes that the innovative drug sector's vibrancy is sustainable, and the trend of "innovation + internationalization" remains the core direction of the pharmaceutical sector. 2. Storage chip concept rising Storage chip concept stocks saw a fluctuation and rise, with Tangshan Sunfar Silicon Industries hitting two consecutive limit ups, and Shenzhen Techwinsemi Technology and others hitting the limit up. Biwin Storage Technology, Shenzhen Longsys Electronics, and Shannon Semiconductor Technology followed suit. Review: According to reports, global memory chip prices have been continuously rising over the past six months. The CFM flash memory market released a report on the storage market outlook for Q4 2025. The report predicts that in the fourth quarter, the price of server eSSDs will increase by more than 10%, and DDR5 RDIMM prices will rise by about 10% to 15%. Institutional Views: 1. Industrial: Short-term layout of domestic demand varieties in combination with economic conditions Industrial believes that with the disclosure of third-quarter reports in October and the approaching Fourth Plenary Session of the 19th CPC Central Committee, the focus should still be on internal factors, with economic conditions and industrial trends remaining crucial. In the short term, it is advisable to focus on domestic demand varieties, including agriculture, minor metals, precious metals, beverages and dairy products, securities firms, and insurance companies. Currently, emphasis should be placed on independent and controllable industries benefiting from military industry, domestic mining power industry chains, and the "14th Five-Year Plan", as well as innovative drugs, North American mining power chains, games, and batteries, among others. 2. Shenwan Hongyuan Group: Technology leadership is needed for effective market breakthrough Shenwan Hongyuan Group believes that overall, technology leadership is needed for an effective market breakthrough. Despite short-term pulse-type adjustments, optimism for the fourth quarter remains. The spring of 2026 may be a cyclical peak, but it is unlikely to be the high point for the full year of 2026, and especially not for this bull market cycle. The bull market will deepen, and as time goes on, the conditions for the full bull market will become more favorable. Under the short-term disturbances of Sino-US trade friction, a preference for risk assets and cyclical assets may lead to adjustments, with hedging assets possibly taking precedence in pulses. Focus should be on banks, rare earths, military industry, and agriculture. The technology sector is expected to achieve new highs in the fourth quarter, offering opportunities for overseas mining power, semiconductors, and Siasun Robot & Automation. The "anti-overwork" trend is the key structure for the transformation from a structural bull market to a comprehensive bull market, and is an important medium-term structure (photovoltaics and chemicals). 3. Orient: High probability of stock index continuing to rebound Orient believes that overall, following the external negative disturbances in the short term, there has been some recovery in the market, and there is a high probability of the stock index continuing to rebound. The Shanghai Composite Index is expected to steadily move towards four thousand points, and big technology companies remain the mainstream in terms of allocation. The pharmaceutical sector and consumer staples, which have undergone significant adjustments, currently offer good value for investors. In addition, a key external variable in the market is the trend of the Renminbi. The central parity rate rose above 7.10 yuan on Wednesday for the first time since November last year, indicating that the renminbi appreciation window may be gradually approaching, benefiting equity assets significantly. This article is a reprint from "Tencent Self-selected Stocks", GMTEight editor: Jiang Yuanhua.