A-share mid-day review | The Shanghai Composite Index surged more than 1% in half a day, with the non-ferrous metals and steel sectors gaining significantly. Computing power hardware stocks continued to be strong.

On October 27, the A-share market in China rose with high volume in the morning, with the Shanghai Composite Index approaching 4000 points, reaching a new high for the year. By midday close, the Shanghai Composite Index was up 1.04%, the Shenzhen Component Index rose 1.26%, and the ChiNext Index rose 1.54%. Market analysis believes that the A-share market has received multiple positive news: 1. Basic consensus reached in China-US economic and trade negotiations, with the US Treasury Secretary stating that they will no longer consider imposing a 100% tariff on China. 2. The central bank is supporting market liquidity, conducting a 900 billion yuan MLF (medium-term lending facility) operation today. 3. In the external market, expectations of a rate cut by the US Federal Reserve have increased, with markets generally expecting another 25 basis point rate cut. On the market, hotspots are rotating rapidly, with steel and non-ferrous metal sectors surging, and stocks like Xiamen Tungsten hitting limit-up. Computing power hardware, such as CPO, continues to be strong, with companies like Zhongji Innolight breaking through 500 yuan for the first time. The coal sector is warming up, with Zhengzhou Coal Industry & Electric Power hitting limit-up. The chip industry chain is bottoming out and rebounding, with stocks like Shenzhen Dawei Innovation Technology hitting limit-up. The controllable nuclear fusion concept is active again, with Ningxia Orient Tantalum Industry hitting a historic high with 3 consecutive limit-ups. On the downside, wind power, gaming, media, and traditional Chinese medicine sectors are trading lower. Looking ahead, Huaxi believes that with the progress in China-US trade negotiations, the ceasefire between Russia and Ukraine, and the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China, global risk appetite is rising. The A-share "slow bull" market trend will continue, with "big technology" remaining a long-term theme. Popular Sectors: 1. Securities stocks saw abnormal rise Securities stocks surged, with Xiangcai Co., Ltd hitting limit-up briefly. CITIC SEC, Dongxing, GF SEC, and Guosen followed suit. 2. Computing power hardware remains strong Computing power hardware, like CPO, continued to be strong, with Shenzhen Kinwong Electronic hitting limit-up. Stocks like Eoptolink Technology Inc., Zhongji Innolight, and Hui Lyu Ecological Technology Groups hit record highs intraday. 3. Lithography machine concept leads the way The chip industry chain was strong, with lithography machines and lithography materials leading the way. Red Avenue New Materials Group briefly hit limit-up, and JiangSu Aisen Semiconductor Material, Crystal Clear Electronic Material, and Jiangsu Nata Opto-electronic Material followed. Institutional Views: 1. Huaxi: Returning to the trend of "slow bulls" with a global technology AI market resonance Huaxi believes that with the positive factors such as the progress in China-US trade negotiations, the ceasefire between Russia and Ukraine, and the Fourth Plenary Session of the 20th Central Committee of the Communist Party of China, global risk appetite is rising, with the Chinese stock market leading the way. The Fourth Plenary Session has solidified investors' expectations for medium to long-term policies, combined with expectations of interactions between China and the US at the APEC summit and a potential rate cut by the US Federal Reserve, short-term risk appetite is expected to be boosted, and the A-share "slow bull" market trend will continue. In terms of structure, "big technology" remains a long-term theme. This week, financial reports of A-share listed companies and US tech giants will be released, against the backdrop of the accelerating global AI arms race, the guidance on AI capital expenditure by tech giants will be the focus, bringing a resonant period for the global technology AI market. 2. CITIC SEC: Market is stabilizing, positioning for new clues CITIC SEC believes that the style switch has essentially ended, rather than beginning, and the market has returned to a structure driven by performance. Two new clues are emerging, one is industrial chain security, as more non-commercial means interfere globally, Chinese companies with advantages in market share and high costs for overseas competitive manufacturing enterprises may benefit significantly, allowing them to convert their market share advantage into pricing power, leading to a continuous rise in profit margins. The second is the diffusion of AI from the cloud side to the edge side, the trend of edge AI as a wider data entry and personalized AI carrier is already very clear, but the start of the market still requires more product examples for catalysts. 3. Zhongtai: Maintaining index strength unchanged Zhongtai believes that the overall positive impact of the Fourth Plenum is good for A-shares, especially in sectors such as technology, manufacturing, and consumer goods, with potential policies exceeding expectations in the future. With the easing of China-US trade tensions, maintaining the index's strength unchanged, they recommend focusing on the transition within technology stocks, with core themes including China's advantage in AI+ direction globally (such as Siasun Robot & Automation, edge AI, leading Hengqiang technology, etc.) and related tracks of "anti-inner circles" (such as polysilicon, photovoltaic modules). In the event of a low probability event of the result of the China-US negotiations being below expectations, they suggest shifting the focus from "technology growth" to "big finance + new consumption", while combining themes of independent controllability (such as military industry, lithography machines, domestic substitutes) and rare resource sectors (non-ferrous metals, rare earths, gold, etc.) for allocation. This article was reprinted from "Tencent Select Stocks". Translated and edited by Wang Qiujia.