A-share closing review | Multiple positive factors driving the index to rise sharply! The market blossoms in multiple areas, with three major investment trends emerging.

On December 22nd, the three major stock market indices surged significantly. By the close of trading, the Shanghai Composite Index rose by 0.69%, reclaiming the 3900-point mark, the Shenzhen Component Index rose by 1.47%, and the ChiNext Index rose by 2.23%. The total trading volume in the two markets was about 1.9 trillion, exceeding 130 billion more than the previous trading day, with over 2900 stocks in the two markets on the rise. The market saw multiple gains today, driven by three main factors: first, the catalyst of benefiting from policy optimism, with the Hainan Free Trade Zone sector and the automotive industry chain strengthening. Second, a rebound in technology stocks, with a recent improvement in the pessimistic sentiment towards overseas AI narratives. Third, a surge in the non-ferrous metal sector, with both spot gold and silver reaching historic highs. In summary, several factors are driving the market's upward trend: First, the resolution of external uncertainties. Institutions point out that the key overseas events such as the "Super Central Bank Week" and the Bank of Japan's interest rate hike that previously suppressed the market have been resolved, reducing interference with global fund risk preferences and stabilizing the external environment. Second, a moderation in pessimism towards overseas technology stocks and favorable developments in the domestic technology industry. Recently, with leading storage company Micron Technologies surpassing expectations in its financial report, and the stabilization and rebound of stock prices for companies like Oracle and Broadcom, as well as positive discussions on the valuation of core AI companies like NVIDIA in the market, the pessimistic narrative towards overseas AI industry has eased, creating a favorable external atmosphere for the rebound of A-share technology stocks. In addition, breakthroughs in the field of new generation photonic computing chips have also provided emotional catalysts. Third, changes in the funding situation, with incremental funds already entering the A-share market via broad-based ETFs by the year-end. Several institutions have observed a substantial increase in net purchases of equity ETFs recently, with active capital support potentially opening the door for a year-end rally in 2026. Specifically, in today's market, the Hainan sector continued its strength, with over 20 stocks like Hainan Haiqi Transportation Group, Hainan Development Holdings Nanhai, Honz Pharmaceutical, and China Tourism Group Duty Free Corporation hitting the limit up. Concepts such as optical modules and high-speed copper cables performed strongly, with the three giants in the "Easygoing Solar" optical module sector collectively rising, and companies like Yangtze Optical Fibre And Cable Joint Stock hitting the limit up. The semiconductor chip industry chain also saw renewed activity, with companies like Suzhou Kematek, Inc. and Shanghai Sinyang Semiconductor Materials surging. The precious metals sector demonstrated strength, with Baiyin Nonferrous Group hitting the limit up. Robotics and automation concept stocks rose in the afternoon, with stocks like Beijing Capital Development and Wolong Electric Group hitting the limit up. In addition, concepts like autonomous driving, fireworks, and lithium batteries also showed some performance during the trading session. On the downside, stocks in the film and television entertainment sector experienced corrections, with Bona Film Group hitting the limit down. Consumer stocks saw differentiation, with Nanjing Business & Tourism Corp.,Ltd. hitting the limit down. The AI medical concept also experienced a volatile decline, with stocks like Anhui Huaren Health Pharmaceutical and Shu Yu Civilian Pharmacy Corp.,Ltd. dropping significantly. Looking ahead, China Securities Co., Ltd. believes that the current market is still in a narrow consolidation phase, with the stock prices of core AI companies in the US stabilizing and limited impact expected following the Bank of Japan's interest rate hike resolution. It is anticipated that A-shares will resonate with global stock markets in their upward trend. Hot Sectors: 1. Hainan continues its strength: The Hainan sector showed short-term momentum, with stocks like Hainan Haiqi Transportation Group, Hainan Development Holdings Nanhai, and Hainan Expressway hitting the limit up. Analysis: On the news front, on December 18th, the operation of the Hainan Free Trade Port officially started with the entire island being sealed off. According to statistics from the Sanya Municipal Bureau of Commerce, on the first day of sealing off, tax-free sales in Sanya reached 118 million yuan. Among them, the Sanya International Duty-Free City greeted over 36,000 visitors on the first day, a year-on-year increase of over 60%. 2. Smart driving concept remains active: The smart driving concept remained active, with Wuhan Guide Infrared hitting the limit up and VanJee Technology rising over 8%. Analysis: According to official news from Chongqing Changan Automobile, on December 20th, the first L3-level autonomous driving vehicle was officially issued a special license plate "AD0001Z" in Chongqing. Ping An Securities stated that the commercialization process of smart driving is expected to accelerate in 2026. The approval of the L3 vehicle model indicates progress in the technology and policy aspects of intelligent driving, laying the foundation for the commercialization of smart driving. 3. CPO concept surges: The CPO sector strengthened, with EverProX Technologies leading the way, and companies like Shenzhen SDG Information, Yangtze Optical Fibre And Cable Joint Stock, Shenzhen Kinwong Electronic, Zhongji Innolight, and Eoptolink Technology Inc. following suit. Analysis: Shanghai Jiao Tong University has made breakthroughs in the field of new generation optical computing chips, providing hardware acceleration for scenarios like artificial intelligence with "intensive computing + energy consumption sensitivity." Tianfeng expressed that the photonic chip market is growing rapidly, and attention should be paid to Chinese companies with the potential for "lane-changing overtaking." Institutional Views: 1. China Securities Co., Ltd.: A-shares expected to resonate with global stock markets China Securities Co., Ltd. believes that the current market is still in a narrow consolidation phase, and with the Federal Reserve's continued rate cuts in December and the policy implementation after the Central Economic Work Conference, A-shares are expected to resonate with global stock markets. From a market sentiment perspective, investor sentiment is expected to improve slightly. The investment strategy focuses on three main themes: dividend value, focusing on high dividend Hong Kong stocks, non-banking and banking sectors; economic prosperity, primarily focusing on non-ferrous metals, AI (liquid cooling, optical communications), new energy (energy storage, solid-state batteries), and innovative drugs. The third theme involves hot topics such as Hainan (duty-free shopping), nuclear power, and ice and snow tourism. 2. CMSC: A-share year-end market expected to usher in a spring uptrend CMSC believes that the A-share year-end market and the spring uptrend may be on the horizon: multiple signals indicate that a classic "year-end - spring" market trend is brewing and is slowly unfolding. On one hand, various work projects are expected to accelerate after the start of the new year, especially with the potential acceleration in the implementation of central budget investments; on the other hand, important institutional investors have been steadily increasing their holdings of A500 ETFs and other broad-based instruments, bringing stable incremental funds to the market. In terms of style, the market trend is likely to focus on blue-chip indices such as the Shanghai and Shenzhen 300 and the Shanghai 50. At the industry level, the focus should be on cyclical-related sectors. In terms of areas, attention should be paid to domestic computing power, commercial aerospace, and controllable nuclear fusion. 3. Guotou Securities: Market still in a high-level consolidation phase until the bull market in fundamentals is clear Guotou Securities points out that the pure liquidity-driven bull market has gradually come to an end after the market index broke through 4000 points, and the market index is still in a repeating high-level consolidation phase until the bullish fundamentals become clear. At the same time, for the year-end (December-January) market trend, the current assessment indicates that the global liquidity has once again created pricing disturbances, and domestic macro liquidity has not shown further signs of easing, constraining the imagination of the year-end market trend. In the first half of next year, the resonating economic growth in China and the US, corresponding to outbound+low-cycle (including global pricing resource commodities, non-ferrous metals, chemicals, industrial metals, engineering machinery, electronics, and electrical equipment) will be advantageous. *This article is adapted from "Tencent Self-selected Stocks", GMTEight Editor: Chen Xiaoyi.