A-share noon review | The trend of the three major indexes diverges, and the large financial sector supports the market. Popular stocks collectively fell.

On January 26th, the performance of A-shares in the morning session was mixed, with small and medium-cap stocks showing weakness. Over 3800 stocks in the market were in the red. By midday, the Shanghai Composite Index rose by 0.12%, the Shenzhen Component Index fell by 0.74%, and the ChiNext Index fell by 0.86%. According to China Securities, two major risk preference variables are emerging. First, under the background of escalating geopolitical risks and the falling US dollar index, gold and silver futures and spot prices surged, leading to capital inflows. Second, popular stocks collectively took a dive, with satellite ETFs plummeting nearly 5%, indicating a significant decrease in speculative activities. The market seems to be moving towards a defensive stance. On the market front, the big financial sector supported the market, with securities and insurance sectors leading the gains. The resource sector remained strong, with the non-ferrous and precious metals concepts continuing to surge, with stocks like Sichuan Gold hitting limit up, and the oil and gas sector gaining strength with CNOOC Limited reaching a historic high. The chemical industry saw a surge, with Hongbaoli Group Corporation, Ltd. hitting limit up. On the downside, the liquor sector fell, with Jiangsu Yanghe Distillery hitting an over 8-year low, and commercial aerospace, military, semiconductor chips, and consumer sectors leading the declines. Looking ahead, CITIC SEC believes that as market confidence continues to recover, it is advisable to increase allocations in non-banking sectors and select domestic demand or high prosperity sectors. Top Sectors 1. Precious metals concepts continue to surge Non-ferrous and precious metals concepts remained strong, with Henan Yuguang Gold & Lead seeing consecutive limit ups, and stocks like Hunan Gold Corporation, Shengda Resources, and Shandong Humon Smelting hitting limit up. Analysis: In terms of news, the spot price of gold broke through $5000 per ounce for the first time. The main contract for silver on the Shanghai Futures Exchange hit the limit up, reaching 28226 yuan per kilogram, with a current increase of 17.0%. According to Huaxi, based on historical patterns, the price of gold in 2026 may rise by 10%-35%. Due to expectations of a rate cut by the Federal Reserve, instability of the US dollar, the US midterm elections, and geopolitical uncertainties, the price of gold is expected to rise further. 2. Oil and gas sector gains strength The oil and gas sector saw strong gains, with CNOOC Limited rising by over 6% to reach a historic high, Hunan Heshun Petroleum hitting limit up, and Petrochina, China Petroleum & Chemical Corporation following suit. Analysis: In terms of news, due to winter storms affecting most parts of the US, the price of natural gas in the US soared on January 25th, with futures prices breaking the $6 per million British thermal units level for the first time since 2022. Donghai Securities pointed out that the price of crude oil is still a key variable for judging the economic cycle. Looking ahead to 2026, if the price of oil stabilizes and sees a moderate rise during the global recovery cycle, it will further benefit the profitability of refining and chemical companies. 3. Liquor sector sees decline The liquor sector saw a decline, with Jiangsu Yanghe Distillery dropping by over 8% to reach a new low since November 2017, and stocks like Sichuan Swellfun, Anhui Gujing Distillery, Jiangsu King's Luck Brewery Joint-Stock, and Jinhui Liquor following suit. Analysis: In terms of news, Jiangsu Yanghe Distillery released its performance forecast for 2025, expecting a decrease in net profit of 62.18%-68.30% compared to the same period last year. Based on this calculation, the company is expected to incur a loss of 1.451 billion to 1.859 billion yuan in the fourth quarter of 2025. Huachuang Securities believes that the liquor industry has entered a stage of "squeezed growth." The future investment logic is no longer about a general rise, but focusing on certainty. Institutional Views 1. China Securities Co., Ltd.: Continue to adhere to the dual mainline of "technology + resources" China Securities Co., Ltd. believes that throughout the year, the economic characteristics of "production stronger than demand, foreign demand better than domestic demand" will persist. Monetary policy remains accommodative, with interbank rates falling to almost the lowest level since 2020. In a macro-weak + liquidity accommodative environment, investment in prosperity is advantageous. Overall, while there has been a recent cooling of regulatory control, the general trend remains positive, and it is advisable to continue to adhere to the dual mainline of "technology + resources." In terms of technology, AI semiconductors/new energy remain the current core of prosperity, with hotspots like AI applications/space photovoltaics/innovative drugs driving prosperity. In terms of resources, the performance forecasts of the non-ferrous industry are good, and attention should be paid to the subsequent transmission and diffusion of prosperity to the petrochemical and machinery sectors. Key sectors of focus: semiconductors, AI, new energy, non-ferrous, chemicals, media, computers, machinery, pharmaceuticals, etc. 2. CITIC SEC: Market confidence continues to recover CITIC SEC believes that as market confidence continues to recover, as long as industry forecasts are logical and not in the heavily weighted industries, allocations could be restored. For example, it may be a good time to increase allocations in the consumption chain from now until the National People's Congress, focusing on expected trades. The real estate chain may also see significant recovery during this period, as the domestic new projects in the building materials sector have already begun. Based on the basic strategy of "resource + traditional manufacturing pricing weight estimation," the foundational combination built around chemicals, non-ferrous metals, new energy, and power equipment is still a resilient choice amidst the contradiction between "market sentiment" and regulatory counter-cyclical adjustments. Based on this, it is advisable to increase allocations in non-banking sectors (securities, insurance) during market downturns, as well as enhance returns through select domestic demand sectors (duty-free, aviation, building materials, etc.) or high prosperity sectors (semiconductor equipment, materials, etc.). 3. Orient: The market is slowly regaining momentum Orient believes that market panic is gradually dissipating, and the market is slowly regaining upward momentum. Overall, the market is in a structural market driven by the dual factors of "policy catalysis + industrial trends." Areas such as commercial aerospace, AI computing power, and storage chips have both policy and industry support, with strong potential for domestic substitution logic in the medium to long term. This article is reprinted from "Tencent Self-selected Stocks". GMTEight Editor: Wang Qiujia.