A-share midday review | Bulls and bears battle at 4100 points! Commercial aerospace continues to fall, AI applications rebound.

On January 20, the A-share market opened weakly in the morning, with the Shanghai Composite Index falling below 4100 points at one point. By midday, the Shanghai Composite Index was down 0.30%, the Shenzhen Component Index was down 1.22%, and the Chinext Index was down 1.83%. Huatai believes that considering the recent capital trends in the market, the future market outlook has been mostly determined. Looking at the indices, the major broad-based indices are not expected to have any major surprises in the short term, with 4190 points on the Shanghai Composite Index possibly being a short-term high. Before February, there is a high probability of a technical correction in the market. If the stock index once again shows accelerated growth, especially driven by sentiment, caution should be taken to prevent the Spring Festival market from being overdrawn or ending prematurely. It is suggested to appropriately avoid some irrational speculation targets and focus more on the "fundamental performance". In terms of market performance, there was rapid rotation of hot spots. The real estate sector performed strongly against the trend, with stocks like Shanghai Chengtou Holding hitting the limit up. AI application-related stocks rebounded, with multiple stocks hitting the limit up. Semiconductor sector surged, with China Micro Semicon (Shenzhen) up by 20%. Chemical sector rose, with multiple stocks hitting the limit up. Consumer stocks were active, with beauty and liquor leading the way. The coal sector saw partial fluctuations, with Henan Dayou Energy hitting the limit up. On the downside, the commercial aerospace sector continued to decline, with non-ferrous metals, military, photovoltaic, and consumer electronics sectors leading the decline. Looking ahead, Guosen believes that the Spring market is still ongoing and there may be opportunities during the phase of periodic fluctuations. The technology sector remains unchanged, with a short-term balanced allocation strategy. Popular Sectors: 1. Real Estate Sector Rise Real estate stocks rose, with companies like Shanghai Chengtou Holding, Hefei Urban Construction Development hitting the limit up. Other stocks like Poly Developments and Holdings Group, China Merchants Shekou Industrial Zone Holdings, Shenzhen Overseas Chinese Town, and Hangzhou Binjiang Real Estate Group followed suit. 2. Rebound in AI Application Direction AI application-related sectors like cultural media saw a rebound, with stocks like Zhewen Interactive Group, Beijing Quanshi World Online Network Information, Guangdong Yowant Technology Group, and Jiayun Technology Inc. hitting the limit up. Institutional Views: 1. Guosen: The Spring market continues, periodic fluctuations present opportunities Guosen believes that the Spring market is still ongoing and there may be opportunities during the phase of periodic fluctuations. The technology sector remains unchanged, with a short-term balanced allocation strategy. Historically, there is no stable dominance of growth or value styles during the Spring market period. For industry allocation during this Spring market, under the drive of the AI wave, technology growth remains the main theme of this bull market. It is recommended to focus on the sub-sectors where AI applications are landing. Additionally, opportunities in certain value sectors such as non-banking, resources, liquor, and real estate are also worth considering. 2. Shenwan Hongyuan Group: Short-term market may enter a consolidation phase Shenwan Hongyuan Group Securities believes that the trends in commercial aerospace and AI application industries are positive, but the market is characterized by strong momentum and excessive trading. Short-term excessive trading is being restrained, and the market may enter a consolidation phase. The A-share market has a foundation for medium-term upward movement, therefore, "staying steady for progress" can balance short-term fluctuations with long-term goals. As the short-term market momentum weakens, there may be rotations in other directions, and the overall profitability effect may shrink. It is advised to patiently wait for further economic, policy, and industry catalyzation, and alleviate the contradictions between fundamentals, valuations, and micro-structures. 3. Huatai: Market starts to focus on "fundamental performance" Huatai believes that considering the recent capital trends in the market, the future market outlook has been mostly determined. Looking at the indices, the major broad-based indices are not expected to have any major surprises in the short term, with 4190 points on the Shanghai Composite Index possibly being a short-term high. Before February, there is a high probability of a technical correction in the market. If the stock index once again shows accelerated growth, especially driven by sentiment, caution should be taken to prevent the Spring Festival market from being overdrawn or ending prematurely. In terms of operations, positions should not be too light, but portfolio structures should be adjusted, appropriately avoiding some irrational speculation targets, and starting to focus more on the "fundamental performance". Currently, industries with significant profit improvement expectations, such as non-ferrous metals, power equipment, and new energy, are worth considering. This article was originally published on "Tencent Stock Selection". Editor: Wang Qiujia.