A-share market closes | Indexes rise with shrinking trading volume, commercial aerospace sector strong throughout the day. What is the reason?

The market hit bottom and rebounded throughout the day, with the three major indexes rising on shrinking volume. As of the close, the Shanghai Composite Index rose 0.34%, the Shenzhen Component Index rose 0.85%, and the ChiNext Index rose 0.7%. On the market, hot topics were active, with the commercial aerospace sector strong throughout the day, with multiple stocks such as Xiamen Changelight hitting the limit up; local stocks in Fujian and the Taiwan Straits continued to rise, with Xiamen XGMA Machinery and Fujian Cement Inc. hitting the limit up; the titanium dioxide concept fluctuated and strengthened, with Gpro Titanium Industry hitting the limit up; dairy stocks fluctuated and strengthened, with Guangdong Yantang Dairy and Jiangxi Sunshine Dairy hitting the limit up; In addition, sectors such as Hainan Free Trade Zone, humanoid Siasun Robot&Automation, and military industries also showed performance. According to Securities Times, there are four main reasons for the strength of the commercial aerospace sector: 1. Recently, the National Space Administration issued the "Action Plan for Promoting the High-Quality and Safe Development of Commercial Aerospace by the National Space Administration (2025-2027)", which specifies 22 key measures in five aspects to promote the high-quality and high-level safety of commercial space. 2. The Ministry of Industry and Information Technology recently issued a notice to organize commercial trials of satellite IoT services. 3. Market expectations for the maiden flight of the "Zhuque-3" carrier rocket developed by Beijing Blue Arrow Aerospace are high. 4. Commercial aerospace companies are launching IPOs in large numbers. Huaxi stated that data shows that China's commercial aerospace market has grown from about 0.38 trillion yuan in 2015 to 2.3 trillion yuan in 2024, with an average annual compound growth rate of about 22%. If calculated at a growth rate of 25%, China's commercial aerospace market is expected to approach 10 trillion yuan by 2030, demonstrating huge growth potential. On the decline side, the flu, pharmaceutical and medical sector fluctuated downwards; short plays, games, and other AI applications declined. Looking ahead, Central China believes that the Shanghai Composite Index is likely to consolidate around 4000 points, with the market style rebalancing continuing, and cycles and technology are likely to take turns to perform. Hot Sectors 1. The titanium dioxide concept performed well The titanium dioxide concept rose, with Gpro Titanium Industry hitting the limit up. Comment: On November 26, the price adjustment announcement of industry leader LB Group Co., Ltd. broke the silence of the titanium dioxide market, with domestic prices increasing by 700 yuan per ton, and international prices increasing by 100 US dollars per ton. Previously, companies in Shandong and Jiangsu had already raised prices by 200-300 yuan/ton, indicating that the struggling titanium dioxide industry is now collectively breaking through the cost transmission barrier. Tianfeng Research Report points out that against the background of anti-internalization, it is worth paying attention to investment opportunities in the titanium dioxide industry. 2. Active performance in the commercial aerospace sector The commercial aerospace sector was active, with Xiamen Changelight hitting the limit up. Comment: On the news front, Beijing plans to build and operate a centralized large-scale data center system with a power output of over a gigawatt (GW) in the 700-800 kilometer dawn-dusk orbit to move large-scale AI computing power to space. Zhongtai believes that the commercial aerospace industry is entering a new period of rapid growth, with over 600 commercial aerospace companies in China, 25 commercial aerospace launch sites (18 in operation and 7 under construction), and the network construction of GW constellations accelerating, reusable rocket technology set to enter a critical validation stage, and space computing construction is the overall trend. The inflection point of the commercial aerospace industry has appeared, and the sector is likely to see intensive catalysis in the near future. It is recommended to focus on investment opportunities in the commercial aerospace sector. 3. Semiconductor stocks fluctuate and strengthen The semiconductor sector fluctuated and strengthened, with Halo Microelectronics rising over 14%. Comment: According to the latest research report from DIGITIMES, global wafer foundry revenue is expected to reach $199.4 billion by 2025, with a year-over-year growth rate of over 25%, and a compound annual growth rate (CAGR) of 14.3% from 2025 to 2030, making it the most important driver of the semiconductor industry's prosperity. CITIC SEC pointed out that the current semiconductor cycle is still in an upward channel, with AI continuing to be strong, and industrial digital transformation taking over from consumer electronics. Looking ahead, AI will continue to be the main driver of growth in the semiconductor industry, with ongoing demand for cloud-based AI and the accelerated deployment of end-point AI applications, as well as Chinese semiconductor manufacturers likely to significantly benefit from the subsequent development of the AI industry. From the perspective of listed companies, the investment logic can be divided into two main themes, with a focus on domestic substitution in the cloud and downstream growth in terminals. 4. Hainan Free Trade Zone concept shows unusual strength The Hainan Free Trade Zone concept showed unusual strength, with Hainan Ruize New Building Material hitting the limit up, and China Hainan Rubber Industry Group following suit. Comment: On December 18th this year, the Hainan Free Trade Port will officially begin operations. According to a research report from China Securities Co.,Ltd., the closure policy of the Hainan Free Trade Port not only reduces the import costs for companies and improves trade facilitation, but also attracts a large amount of domestic and foreign investment through measures such as tax incentives and financial openness. In particular, the "zero-tariff" policy, the processing value-added tax-free policy, and the establishment of a multi-functional free trade account offer unprecedented development opportunities for companies. 5. Dairy stocks show strength Dairy stocks are performing strongly, with Jiangxi Sunshine Dairy and Guangdong Yantang Dairy both hitting the limit up. Comment: On the news front, Sichuan Province recently officially implemented optimized policies for marriage and maternity leave, greatly extending the leave for marriage, female maternity, and male nurturing: marriage leave extended to 20 days, female maternity leave extended by 90 days, and male nurturing leave extended to 30 days. Huatai Research Report believes that necessary consumer companies in China still have plenty of room for structural upgrades and overseas expansion. In recent years, the dividend payout ratio of leading companies has continued to increase, providing a three-fold advantage of dividend yield, high long-term growth, and low valuation elasticity in a low interest rate environment. The current allocation ratio and valuation percentile of necessary consumer industries are at historically low levels, already entering the high probability interval of left side bottoms, and it is recommended to actively seize opportunities in the sector. Institutional Views Guotou Securities: The current market volatility is a "clear sky turbulence," and the probability of severe volatility in the future is low. Guotou Securities stated that the recent decline in the market indexes is the result of the A-share market being negatively affected by the resonance of global assets during the fall. It is inclined to think that the current market volatility is a "clear sky turbulence," with a low probability of severe volatility in the future. It is important to realize that the current bull market logic based on liquidity has been fully priced in since the market index broke through 4000 points. The bullish logic in the future must be based on the realization of fundamental bull logic. Depending solely on liquidity-driven bull markets may be at a turning point. Transitioning gradually from a liquidity-driven bull to a fundamental bull requires monitoring two core points: the stabilization of the volatile political cycle (the easing of economic and trade relations) and the rebound of economic cycle forces (resonance of deficits). The style shift is inevitable at the moment, and this round of high-to-low trading in the A-share market is unlikely to end by the end of the year. It is expected that the real style change will only occur when the transition from the "liquidity bull" to the "fundamental bull" is clear, with the maritime and low-cycle industries potentially being the last betting opportunities of the year. The rebound of A-share technology and Hong Kong technology stocks depends mainly on whether the Fed can achieve a rate cut in December. Tianfeng Securities: The recent adjustment in A-shares is the recharge of the bull, and attention should be paid to the resurgence of trading activity Tianfeng's research report states that the recent adjustment in A-shares is the recharge of the bull, and attention should be paid to the resurgence of trading activity. Unlike the strong leadership in the mainline market in August-October, the market has seen rotation from mainline gains to value of the large market and sentiment indices/micro markets. Referring to the two waves of experience from December 2024 to January 2025 and March to April 2025, the decline in trading activity precedes the decline in margin balance. Trading activity has dropped from a high of 12% in October to around 10% recently. Therefore, the margin balance decline is also expected to occur, and based on the previous two segments, the next month may be a consolidation period, focusing on confirming the bottom of the trading activity on the right. With respect to economic recovery and market liquidity, the investment mainlines can be reduced to three directions: 1) DeepSeek breakthroughs and tech-driven AI; 2) internal and external resonance, gradual economic recovery, the mainline style "stronger always" but likely to show performance in the latter half of the cycle; 3) the rise of undervalued red dividends. Red dividend pullbacks often occur when there is a strong trend in the industry, so the height of the undervalued dividend depends on the progress of the AI industry trend. The progress of the AI industry trend depends on breakthroughs in AI applications and consumption, with a focus on Hang Seng Internet. Soochow Securities: If trading volume does not effectively increase, be wary of repeated trends even after a rebound. Soochow believes that from a funding perspective, recent liquidity has been affected by the fluctuating expectations of a Fed rate cut. Therefore, it is important to control positions in the short term. If trading volume does not effectively increase, be wary of repeated trends even after a rebound. Cai Xin Securities: It is expected that around mid-December, the A-share market will usher in a new window of opportunity for long positions. Cai Xin Securities believes that in the short term, continue to wait for a volume spike or other clear signals of a rebound. It is expected that around mid-December, with institutional funds reallocating towards the direction of next year, and the Fed rate cut kicking in, the A-share market will usher in a new window of opportunity for long positions. This article was reprinted from "Tencent Self-Selected Stocks." GMTEight Editor: Chen Xiaoyi.