A-shares midday review: three major indices slightly drop in the morning, Zhejiang Fenglong Electric issues emergency statement after 17 consecutive limit-up days, commercial aerospace concept regains popularity.

On January 22, the A-share market opened high and then went low in the morning session, with all three major indexes turning green collectively. The turnover in the first half of the day was 1.77 trillion yuan, an increase of 142.6 billion yuan compared to the previous trading day. By the midday close, the Shanghai Composite Index fell by 0.15%, the Shenzhen Component Index fell by 0.17%, and the ChiNext Index fell by 0.4%. Huaxi believes that regulatory "counter-cyclical adjustments" will support the A-share market's "slow bull" trend, with the market's slope expected to gradually slow down and evolve towards a healthy bull market. Looking ahead, the overall valuation of A-shares is still within a reasonable range, investor risk appetite remains high, and factors such as macro policy support, medium to long-term capital inflows, and moderate recovery in corporate profits are expected to support the continuation of the bull market. In terms of the market's performance, there was rapid rotation of hotspots, with the commercial aerospace concept heating up again. Juli Sling Co., Ltd. saw two consecutive trading limit up days, as did Western Metal Materials and more than 10 other stocks. The oil and gas sector continued to be strong, with Geo-Jade Petroleum Corporation also seeing two consecutive trading limit up days. The coal sector saw a rise, with Henan Dayou Energy hitting the trading limit. Additionally, sectors such as AI applications, controllable nuclear fusion, photovoltaics, computing power, and Siasun Robot&Automation all showed some performance during trading. On the downside, sectors like non-ferrous metals, precious metals, and semiconductors, which performed strongly the previous day, saw a correction, while sectors like insurance and beauty care led the declines. In terms of individual stocks, Zhejiang Fenglong Electric hit the trading limit again, extending its streak to 17 consecutive trading limit up days, with over 2 billion yuan still waiting to buy in. In the morning of January 22, Zhejiang Fenglong Electric replied to investor questions on the interactive platform, stating that within the next 36 months, Shenzhen UBTECH ROBOTICS Technology Co., Ltd. has no plans or arrangements to go public through restructuring with a listed company; within the next 12 months, UBTECH ROBOTICS has no asset restructuring plans. Looking ahead, Huaxi believes that the overall valuation of A-shares is still within a reasonable range, investor risk appetite remains high, and factors such as macro policy support, medium to long-term capital inflows, and moderate recovery in corporate profits are expected to support the continuation of the bull market. Hot Sectors: 1. Commercial aerospace concept heating up again The commercial aerospace concept continued to heat up, with Jiangsu Jiuding New Material hitting three trading limit up days in four days, Juli Sling Co., Ltd. seeing two consecutive trading limit up days, and Western Metal Materials, Jiangsu Zhongchao Holding, and more than 10 other stocks hitting the limit up. Analysis: Recently, three commercial aerospace companies, Xinghe Dynamics, Xinghe Glory, and Tianbing Technology, have updated their listing guidance progress, in addition to Blue Arrow Aerospace's IPO application, and Zhongke Aerospace's completion of guidance and filing. The five core enterprises operating carrier rockets have all entered the game, aiming for the title of "the first stock in commercial aerospace." Sinolink analysis believes that 2026 will be the "alpha year" of commercial aerospace in China, with the industry logic shifting from simple thematic mapping to fundamental investment based on the realization of supply chain performance. 2. Oil and gas sector continues to be strong Stocks related to oil, gas, and gas concepts continued to perform strongly, with Geo-Jade Petroleum Corporation hitting two consecutive trading limit up days, and Shanxi Blue Flame Holding, Shandong Shengli, and several other stocks also hitting the limit up. Analysis: On January 22, Brent crude benchmark price was $64.92 per barrel, up 5.85% from earlier this month ($61.33 per barrel). CITIC SEC believes that geopolitical risks may drive short-term oil price hikes, but considering the current global oil market is still in a loose supply situation, oil prices are expected to remain volatile between $60-70 per barrel. It is recommended to focus on oil and gas production companies, as well as companies producing asphalt, sulfur, and petroleum coke. Institutional Views: 1. Huaxi: Market evolving towards a healthy bull Huaxi believes that regulatory "counter-cyclical adjustments" are supporting the A-share market's "slow bull" trend. The market's slope is expected to gradually slow down and evolve towards a healthy bull market. Looking ahead, the overall valuation of A-shares is still within a reasonable range, investor risk appetite remains high, and factors such as macro policy support, medium to long-term capital inflows, and moderate recovery in corporate profits are expected to support the continuation of the bull market. As we enter the intense period of annual performance forecasts in late January, funds may once again focus on performance-driven themes. In terms of industry allocation, 1) focus on the diffusion of the technology industry trends, such as AI computing power, AI applications, Siasun Robot & Automation, and Hong Kong-listed Internet companies, 2) benefit from the "anti-overwork" and price increase trends, such as chemicals, non-ferrous metals, etc., 3) focus on high growth performance in annual performance forecasts, such as electronics, machinery and equipment, medicine, etc. 2. CMSC: Emotions around performance disclosure intensify CMSC believes that looking ahead, after reaching a previous high, A-shares are expected to enter a period of oscillation. In late January, emotions around performance disclosure will significantly intensify, with a focus on performance exceeding expectations or the impact of performance disclosures. Overall, it is recommended to focus on large-cap growth stocks, and industry allocation should mainly revolve around spring momentum and positioning before the annual report, with a focus on cyclical growth and technology sectors. Key industries to watch include power equipment, machinery and equipment, non-banking financials, electronics, non-ferrous metals, and basic chemicals. 3. Orient: Significant rebound in stock indexes expected after Chinese New Year Orient believes that in the short term, stock indexes still lack rebound momentum, with the Shanghai Composite Index oscillating around 4100 points, and a significant rebound in stock indexes is expected after the Chinese New Year. Overall, under the strong empowerment of AI technology, multiple segments in the technology field maintain a high prosperity trend, with numerous companies along the industrial chain achieving steady growth through technological iteration and demand release, becoming a focus of market capital attention. Sectors like photovoltaics, liquor, and pig breeding are influenced by market fluctuations and supply-demand adjustments, putting pressure on company performance. The investment style of "liking new and rejecting old" is expected to remain popular this year.