A-shares closing review | Gold and silver experience epic plunge again, dragging down all three major indices of A-shares by more than 2%! Institutions gauge the market situation in February.

On February 2nd, spot gold and silver collectively plummeted. As of 14:40, spot gold fell by 10%, currently trading at $4404.57 per ounce; spot silver dropped over 15% intraday to $71.5 per ounce, a $50 drop from its historical high, nearing the erasure of its annual gains. Domestic commodity futures closed generally lower, with several varieties including Shanghai silver, palladium, platinum, and others hitting limit-down. The volatility in gold and silver affected Asian stock markets, with Hong Kong A-shares collectively plunging. Among them, the three major A-share indexes fell by over 2%, with the ChiNext 50 Index dropping by 3.88%. By the closing bell, the Shanghai Composite Index fell by 2.48%, the Shenzhen Component Index by 2.69%, and the Growth Enterprise Market by 2.46%. The turnover in Shanghai and Shenzhen amounted to 2.58 trillion yuan, a decrease of 250.8 billion yuan from the previous trading day. Regarding the trend of precious metals, a recent research report by CICC analysis suggested that the price of gold has clearly surpassed pure fundamental factors, and traditional gold assessment models such as real interest rates are no longer effective. The greater influences of geopolitical and monetary system reconfiguration factors currently have no specific realization time, leaving short-term room for market imagination. Investors need to be cautious as the sharp rise and fall of gold are driven by emotions and capital and are difficult to predict. On the market front, electric power concepts such as transformers, power grid equipment, and ultra-high voltage surged, with stocks like YINOW ELECTRIC, San Bian Science & Technology, and Beijing SOJO Electric hitting limit-up; liquor stocks rose, with Jinhui Liquor and Gansu Huangtai Wine-Marketing Industry hitting the daily limit; consumer stocks like food and retail were active, with stocks like YouYou Foods and Yinchuan Xinhua Commercial hitting the limit-up; the robotics and automation sector reversed course in the afternoon, with Jiangnan Mould & Plastic Technology hitting the limit; entertainment stocks surged, with Hengdian Entertainment hitting the limit; the optical module concept was active, with Tongding Interconnection Information and Jiangsu Tongguang Electronic Wire & Cable hitting the limit. In terms of decline, precious metals, minor metals, and other nonferrous metals sectors saw a widespread drop, with component stocks like Hunan Silver, Western Region Gold, and Sichuan Gold hitting limit-down; oil and gas stocks opened low and continued to decline, with Zhongman Petroleum And Natural Gas Group Corp., Ltd. and Xinjiang Zhundong Petroleum Technology hitting the limit-down; the coal sector continued to weaken, with Henan Dayou Energy hitting the limit; steel stocks fluctuated downward, with CITIC Pacific Special Steel Group and Liuzhou Iron & Steel hitting the limit; the semiconductor industry chain trended downward, with the storage chip sector leading the decline, as stocks like GigaDevice Semiconductor Inc., Shenzhen Mason Technologies, and Ucap Cloud Information Technology Co., Ltd. hit the limit; pesticide and chemical stocks fluctuated downward, with Sichuan Hongda and Lier Chemical hitting the limit. Looking ahead, Galaxy Securities believes that the short-term market may still be dominated by structural volatility, with frequent style shifts. In terms of opportunities, Shenwan Hongyuan Group recommends focusing on the main catalysts in February and seizing style rotation opportunities. Firstly, the food and beverage, real estate sectors are expected to be a potential rotation direction; secondly, focus on quality assets in cyclicals with both beta elasticity and alpha value; thirdly, pay attention to the space PV and AI application sectors that have seen significant gains in the past, leveraging catalyst signals, with a focus on Hong Kong-listed internet companies. Hot sectors 1. Electric power concepts surged Transformers, power grid equipment, ultra-high voltage and other electric power concepts surged, with stocks like YINOW ELECTRIC, San Bian Science & Technology, and Beijing SOJO Electric hitting limit-up. Comment: Currently, the global AI computing construction is entering a breakout period, and electric power equipment transformers are upgrading to become the core of computing infrastructure. In Guangdong, Jiangsu, and other places, many transformer factories are running at full capacity, with some business orders for data centers extending to 2027. 2. Precious metals sector sees mass limit-down The precious metals, minor metals, and other non-ferrous metals sectors saw a widespread decline, with component stocks like Hunan Silver, Western Region Gold, and Sichuan Gold hitting the limit-down. Comment: On January 30th, the international precious metals market experienced a collapse-style dive, with spot gold plummeting over 12% at its peak during the trading session and ultimately closing down by 9.52% at $4865 per ounce; spot silver also plunged by 36% at one point and closed down by 26.9% at $84.7 per ounce. Sublime China Information's precious metals analyst Huang Jiaqi stated that in the short term, precious metal prices may continue to fluctuate. 3. Liquor concept continues to strengthen The liquor concept was active once again, with Gansu Huangtai Wine-Marketing Industry hitting its third daily limit, Sichuan Swellfun touching the limit-up, and Jinhui Liquor and Jiugui Liquor following suit. Comment: A research report by China Securities Co., Ltd. indicated that the liquor industry is expected to bottom out by 2026, with market share concentrations increasing, and it is optimistic about the investment opportunities in the liquor sector around the Chinese New Year. 4. Optical module concept remains active The optical module concept remained active, with Tongding Interconnection Information, Jiangsu Tongguang Electronic Wire & Cable hitting the limit-up, and Yangtze Optical Fibre And Cable Joint Stock, Tongyu Communication Inc., and Eoptolink Technology Inc. following suit. Comment: In terms of news, "Yi Zhongtian" 2025 collectively saw positive earnings surprises, with Eoptolink Technology Inc. experiencing a net profit increase of more than double, and Zhongji Innolight nearly doubling. According to a report by Guosheng, amid a high cycle in the computing power industry chain, leading optical module manufacturers in mainland China and Thailand are accelerating production expansion. It is expected that the first quarter of 2026 will see a concentrated release of optical module industry capacity, driving performance into a new round of growth. Institutional Views 1. Shenwan Hongyuan Group: Recommends focusing on the main February catalysts, seizing style rotation opportunities Shenwan Hongyuan Group's chief strategy analyst Wang Sheng believes that the spring market trend is continuing, and the established narrative path has not been broken. They recommend focusing on the main catalysts in February and seizing style rotation opportunities. Firstly, food and beverage, real estate are expected to be potential rotation directions; secondly, continue to focus on quality assets in cyclicals with both beta elasticity and alpha value; thirdly, pay attention to the space PV, AI application sectors that have seen significant gains in the past, leveraging catalyst signals for positioning, with a focus on Hong Kong-listed internet companies. 2. Galaxy Securities: Pre-holiday sector rotation trend upwards is the main theme With the January manufacturing PMI falling back below the boom-bust line, indicating a continued lack of effective demand. Jerome Powell being nominated as the Federal Reserve Chairman has had a significant impact on external markets. However, A-share liquidity support continues, and as the Spring Festival holiday approaches, market trading activity remains at a high level. The short-term market may still be dominated by structural volatility, with frequent style shifts, focusing on sectors with strong fundamental support. Sector rotation is expected to remain the main theme before the Spring Festival, focusing on structural opportunities within the rotation. Main theme one, technology innovation. In the short term, focus on rotational supplementary opportunities between sub-sectors. Previous strong themes such as commercial aerospace, AI applications are catalyzed by industry trends, but internal differentiation may increase. Main theme two, manufacturing, resource sectors with clear profit recovery paths. The volatile situation in the non-ferrous metal market, coupled with earnings forecasts showing strong fundamentals, is worth watching for short-term positioning opportunities after the pullback. Auxiliary theme one, the continued policy of consumer goods upgrading, coupled with the recent favorable policies for service consumption, presents a layout window for consumer sectors under the guidance of expanding domestic demand. Auxiliary theme two, the trend of going global is driving the opening of corporate profit space. 3. Zheshang: Strategic continuation of bullish view, moderate structural adjustments Looking ahead, the technology growth sector, after a strong three-week period, is now following the lead of the weighted index into a high-level oscillation; and the recent strongest sector of non-ferrous resources is experiencing bi-directional fluctuations against the backdrop of wide-ranging swings in global commodity prices. The early launch of the spring offensive and the "fast track" of the technology and CKH HOLDINGS resource sectors which experienced consecutive increases since mid-December last year has come to a close. It is highly likely that the market will enter a pattern of strong oscillation before the Year of the Horse Spring Festival. In terms of configuration, based on the judgment of "style conversion from growth rotation to rest, strategic bullish view with short-term oscillation." It is recommended to have a mid-term warehouse without fear of short-term fluctuations, still focusing on the "systemic slow bull," but it is recommended to moderately control portfolio flexibility.