A-share midday review | Both innovation and entrepreneurship indices fell by more than 2%, with over 4100 stocks in the market turning green. Technology sector saw a pullback, while cyclical stocks were heating up.

On October 17th, the A-share market fluctuated weakly in the morning session, with over 4100 stocks in the market trading lower. By midday close, the Shanghai Composite Index fell by 1.00%, the Shenzhen Component Index fell by 1.99%, the ChiNext Index fell by 2.37%, and the Sci-Tech Innovation 50 Index dropped by over 2%. Regarding the market, analysis from Debon Securities indicates that under external pressures, the market has started to shrink in volume, reflecting a certain risk-averse sentiment. In the short term, value sectors represented by dividends may continue to outperform. If there is no increase in trading volume in the future, the index may continue to face range-bound pressure. However, as negotiations continue and uncertainties gradually diminish, combined with the upcoming Fourth Plenary Session of the 19th Central Committee of the Communist Party of China and the formulation of the 15th Five-Year Plan, growth sectors in the future are still worth long-term investment. In terms of market performance, the technology sector continued to experience significant adjustments, with mining power, semiconductors, and consumer electronics leading the decline. Additionally, new energy, automotive, and defense sectors were among the top decliners. Amidst the market decline, pro-cyclical sectors continued to heat up, with banking stocks performing strongly. Agricultural Bank of China reached a new high during trading, leading the banking sector index to rise for the seventh consecutive day. Coal, oil and gas sectors also rose, with Lingyuan Iron & Steel and others hitting the limit-up. Precious metals, shipping, and real estate sectors also showed some performance. Innovative pharmaceuticals and other healthcare stocks remained active, with Huapont Life Sciences hitting the limit-up. Looking ahead, CMSC believes that while short-term adjustments are inevitable, the market still shows resilience. There is a high possibility of the index reaching new highs after the impacts subside, and this adjustment may be an opportunity to optimize the market structure. Popular Sectors: 1. Strong performance in the innovative pharmaceutical sector. 2. Continuation of strength in the coal sector. Institutional Views: 1. CMSC: Short-term adjustments are unavoidable, but the market still shows resilience. 2. Debon Securities: Short-term value sectors represented by dividends may continue to outperform. 3. Orient: Short-term adjustments will not change the market's upward trend.