A shares closing review | Multiple positive factors are coming! Shanghai Composite Index aims at 4,000 points, and ChiNext Index closes up nearly 2%, with a significant increase in the non-ferrous sector.

On October 27, A-shares surged on high volume, with the Shanghai Composite Index approaching 4000 points, hitting a ten-year high. By the close of trading, the Shanghai Composite Index rose by 1.18%, the Shenzhen Component Index rose by 1.51%, and the ChiNext Index rose by 1.98%. Market analysis believes that A-shares are benefiting from multiple positive news: 1. A basic consensus was reached in the 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 maintaining market liquidity, conducting 900 billion yuan in Medium-term Lending Facility (MLF) operations today. 3. In the external market, expectations for a rate cut by the Federal Reserve are rising, with the market generally expecting another 25 basis point rate cut. On the market front, rotation of hot spots is fast, with the technology sector leading the gains. Chip-related industries such as storage chips saw a surge in the afternoon, with Shenzhen Longsys Electronics and Shenzhen Techwinsemi Technology both hitting historical highs. Computing power hardware such as CPO continued to show strength, with Zhongji Innolight's stock price breaking through 500 yuan for the first time in history, and Eoptolink Technology Inc. and several other stocks hitting new highs. The steel and non-ferrous sectors saw significant gains, with multiple stocks like Xiamen Tungsten hitting the limit up. Brokerage stocks surged, with Dongxing showing an abnormal rise in trading. The coal sector saw a rebound, with Zhengzhou Coal Industry & Electric Power hitting the limit up. The controlled nuclear fusion concept was active again, with Ningxia Orient Tantalum Industry hitting a historical high. Stocks from Fujian province surged, with Strait Innovation Internet among the limit up stocks. On the downside, sectors like wind power, gaming, media, traditional Chinese medicine, and real estate were in the red. Looking ahead, Huaxi believes that with the progress in the China-US economic and trade negotiations, the ceasefire between Russia and Ukraine, and other positive factors like the Fourth Plenary Session of the 20th Central Committee, global risk appetite for funds is returning. The "slow bull" trend in A-shares is expected to continue, with "big technology" remaining a long-term trend. Popular sectors: 1. Strong performance in computing power hardware CPO and other computing power hardware saw strong performance, with Shenzhen Kinwong Electronic hitting the limit up, and Eoptolink Technology Inc., Zhongji Innolight, Hui Lyu Ecological Technology Groups and other stocks hitting historical highs. Analysis: On October 26, Zhongji Innolight replied to investors on the Shenzhen Stock Exchange's interactive platform, stating that the company's 1.6T product is continuously being introduced. As of 10 p.m. on October 26, a total of 9 listed companies in the optical module sector in A shares had disclosed their third quarter report for 2025, with 8 companies reporting a year-on-year increase in net profit attributable to shareholders of listed companies. Recently, many listed companies, including Huagong Tech and Jonhon Optronic Technology, have expressed optimism about the future market demand for optical modules. 2. Surge in the non-ferrous metal sector The non-ferrous metal sector gained strength, with Xiamen Tungsten, Ningxia Orient Tantalum Industry and others hitting the limit up, while China Tungsten and Hightech Materials, Western Superconducting Technologies, Chongyi Zhangyuan Tungsten and others saw significant increases. Analysis: Recently, a symposium on the operational status of key enterprises in the non-ferrous metal industry in the third quarter of 2025 was held, with the China Nonferrous Metals Industry Association emphasizing the importance of industry self-discipline and preventing "internal curling" vicious competition. Ping An Securities pointed out that the second half of the year is still in a loose cycle, with some metal fundamental trends continuing to improve, and with the resonance of financial and commodity attributes, the price center of precious and industrial metals is rising. It is recommended to focus on enterprises with outstanding cost advantages and expected volume growth in the coming years. 3. Brokerage stocks surge Brokerage stocks surged, with Dongxing rising by more than 9%, and Xiangcai Co., Ltd., CITIC SEC, GF SEC, and Guosen following suit. Analysis: The 2025 Financial Street Holdings Forum Annual Meeting will be held at Financial Street Holdings in Beijing from October 27 to 30, with the attendance of important guests from more than 30 countries and regions. Institutional viewpoints: 1. Huaxi: Returning to the "slow bull" trend, global technology AI market shaken together Huaxi believes that with the progress in the China-US economic and trade negotiations, the ceasefire between Russia and Ukraine, and other positive factors like the Fourth Plenary Session of the 20th Central Committee, global funds' risk appetite is warming up, leading China's stock market. The Fourth Plenary Session has solidified investors' long-term policy expectations, coupled with expectations for China-US interaction at the APEC summit and the Fed rate cut, short-term risk appetite is expected to be boosted, and the "slow bull" trend in A-shares will continue. Structurally, "big technology" remains the long-term trend. This week, the financial reports of A-share listed companies and US technology giants will be released, and in the context of the accelerating global AI arms race, the guidance of AI capital expenditure by technology giants will be a focus, shaking up the global technology AI market. 2. CITIC SEC: Market calming down, positioning new clues CITIC SEC believes that the style switch has basically ended rather than just beginning, and the market is returning to a structure driven by performance. Two new clues are emerging: industrial chain security, as global disruptions increasingly occur through non-commercial means, China's market share advantage is significant, and overseas competitive manufacturing enterprises with high reset costs may benefit significantly, transforming market share advantage into pricing power, driving continuous profit margin increase; the diffusion of AI from the cloud side to the edge side, the trend of edge AI as a broader data entry and personalized AI carrier is already evident, but more product instances are needed to catalyze the market. 3. Zhongtai: Maintaining a bias towards index strength Zhongtai believes that the Fourth Plenary Session Communique is overall positive for A shares, especially in sectors like technology, manufacturing, and consumption. There may be unexpected policies in the future. With the easing of China-US trade tensions, it maintains a bias towards index strength, and recommends focusing on internal shifts in technology stocks, with core themes including China's advantage in the global AI+ direction (such as Siasun Robot&Automation, edge AI, leading companies in the Heng Seng Technology sector) and related tracks of "anti-curling" (such as polysilicon, photovoltaic components). In the unlikely event that the outcome of the China-US negotiations falls short of expectations, it recommends shifting the main themes from "technology growth" to "big finance + new consumption", along with focusing on self-controllable themes (such as military industry, lithography machines, domestic substitutions) and rare resource sectors (non-ferrous metals, rare earths, gold) for allocation. This article is reproduced from "Tencent Stock Selection", edited by: Li Fo.