A-share market closing review | Three major variables concentrated attacks! The Shanghai Composite Index fell by 0.64% on shrinking volume, with brokerage stocks supporting the market.

On February 5th, the three major indexes fell all day, with the banking and securities sectors rising in the afternoon to support the market. ChinaLin hit the daily limit, and Xiamen Bank Co., Ltd. hit a 4 and a half year high. By the close, the Shanghai Composite Index fell 0.64%, the Shenzhen Component Index fell 1.44%, and the ChiNext Index fell 1.55%. The total turnover in the Shanghai and Shenzhen stock markets was 2.18 trillion yuan, a decrease of 304.8 billion yuan from the previous trading day. According to Securities China, three major variables are coming together: Firstly, although the A-share market rebounded significantly yesterday, margin financing decreased by 13.9 billion yuan from the previous trading day. It can be said that "structural deleveraging" is happening. Secondly, the leverage index in the U.S. market continued to decline last night, with a decline greater than the previous trading day. Since reaching its peak on January 13th, the index has been declining continuously, with occasional minor rebounds but not changing the trend. Thirdly, there is a major change happening in the narrative logic of technology. On one hand, Oracle's layoffs have made the market realize that AI financing is not as smooth as imagined; on the other hand, the logic of AI impacting software companies is continuing. This has led to significant pressure on the valuation of the entire AI sector. In terms of the market, sectors such as film and television, tourism, and food and beverage have all performed strongly. Stocks such as Guangzhou Jinyi Media Corporation, Shaanxi Tourism Culture Industry Holding, and HaiXin Foods hit the daily limit. New consumer concepts like grain economy are also rising. The banking and securities sectors rose in the afternoon, with ChinaLin and Xiamen Bank Co., Ltd. hitting a 4 and a half year high. AI application concepts like AI cartoon drama, media, and AI companions rebounded, with stocks like Beijing Quanshi World Online Network Information and Guangdong Yowant Technology Group hitting the daily limit. Local companies in Fujian and cross-strait concepts rose, with stocks like Zhongfu Straits and Fujian Kuncai Material Technology hitting the daily limit. The real estate sector continued to be strong, with stocks like Metro Land Corporation and Shenzhen Wongtee International Enterprise hitting the daily limit. In terms of declines, the non-ferrous metals sector plummeted again, with stocks like Baiyin Nonferrous Group, Hbis Resources, and Hunan Silver hitting the daily limit. The entire photovoltaic industry chain saw a major decline, with stocks like Hainan Drinda New Energy Technology and Shuangliang Eco-Energy Systems hitting the daily limit. The power sector declined across the board, with stocks like Hangzhou Zhonhen Electric and Beijing Sifang Automation hitting the daily limit. Hardware concepts like light modules and computational power continued to decline, with stocks like Shenzhen Zesum Technology and Wuxi Taclink Optoelectronics Technology falling by over 10%. Cyclical concepts like coal, steel, and chemicals also fell again, with stocks like Zhejiang Wanfeng Chemical hitting the daily limit. Popular concepts like storage chips, humanoid Siasun Robot & Automation, hydrogen energy, space computing power, commercial aerospace, and quantum technology were all weak. Looking ahead, Huatai pointed out that as market volatility increases and overseas U.S. bond yields and the U.S. dollar index rise, the value of high dividend stocks has marginally increased compared to the previous month. Regarding the storm of selling precious metals, Guosen Futures stated that the historic plunge has completely reshaped the short-term ecology of the precious metals market, signaling the end of one-way flow or smooth market conditions. Hot Sectors: 1. Collective slump in non-ferrous metals: Non-ferrous metals, minor metals, gold, silver concepts collectively plummeted, with stocks like Baiyin Nonferrous Group, Hbis Resources, and Hunan Silver hitting the daily limit. Feedback: Due to the easing of tensions in the Middle East and between the U.S. and China, coupled with weakening economic data from the U.S., there has been a continued downward trend in gold and silver prices. 2. Strong performance in consumer sectors: Concepts like film and television, tourism, food and beverage, retail, medical beauty, and traditional Chinese medicine all performed strongly, with stocks like Guangzhou Jinyi Media Corporation, Shaanxi Tourism Culture Industry Holding, and HaiXin Foods hitting the daily limit. Feedback: The Ministry of Commerce and 9 other departments issued the "2026 'Happy Shopping' Spring Festival Special Event Plan" encouraging the exchange of old items for new ones during the Spring Festival period and increasing support for offline retail businesses. This is expected to boost the sector as demand for food and goods increases. 3. Major adjustment in the photovoltaic industry chain: Concepts like space photovoltaics, perovskite batteries, and photovoltaic equipment all saw a major decline, with stocks like Hainan Drinda New Energy Technology and Shuangliang Eco-Energy Systems hitting the daily limit. Feedback: The secretary-general of the China Photovoltaic Industry Association stated that space photovoltaic technology is still in the early stage of exploration and verification, and it is too early to determine a clear technological direction. 4. Continued decline in domestic hard technology concepts: Concepts like fiber optic cables, light modules, PCBs, and liquid cooling all continued to decline, with stocks like Shenzhen Zesum Technology and Wuxi Taclink Optoelectronics Technology falling by over 10%. Feedback: The U.S. software sector experienced its most severe sell-off since 2022. The sell-off in the technology sector led by software stocks is spreading, with a sharp pullback in the recent favorites like flash memory chips as the narrative of AI fueling storage demand collapses. Institutional Views: Looking ahead, Huatai pointed out that as market volatility increases, overseas U.S. bond yields and the U.S. dollar index rise, the value of high dividend stocks has marginally increased compared to the previous month. Guosen Futures stated that the historic plunge has completely reshaped the short-term ecology of the precious metals market, signaling the end of one-way flow or smooth market conditions. 1. Huatai: As market volatility increases, the value of high dividend stocks has marginally increased compared to the previous month. Huatai stated that in January, the market's risk appetite continued to decline, with high dividend stocks performing better overall than in December last year, particularly in sectors like petroleum, coal, and steel. Looking at February, as market volatility increases and overseas U.S. bond yields and the U.S. dollar index rise, the value of high dividend stocks has marginally increased compared to the previous month. They suggest focusing on stable high dividend stocks with defensive attributes and some potential high dividend stocks. 2. Guosen Futures: The precious metals market may see the end of smooth market conditions. Guosen Futures stated that the historic plunge has completely reshaped the short-term ecology of the precious metals market, signaling the end of one-way flow or smooth market conditions. The market has entered a new phase dominated by higher uncertainty and normalized volatility. The driving logic has shifted from simple "easiness and hedging" to a fierce battle between long and short factors. In the long term, structural support such as geopolitical risks and central bank gold purchases under de-dollarization still exist. But in the short term, the policy uncertainty brought about by the leadership change at the Federal Reserve will become the core variable driving intense price volatility. The nomination of Powell and his potential policy direction is forcing the market to reassess previous expectations of extreme easing. 3. Tianfeng: The "Spring Festival frenzy" this year may be prolonged. Tianfeng stated that whether it is the policy expectations in the beginning year of the "15th Five-Year Plan", the prospects of global liquidity easing, or the trend of resident funds shifting to equity assets, it could strengthen the post-holiday market's upward trend. The "Spring Festival frenzy" this year may be more sustained. In addition, this year's "ultra-long nine-day Spring Festival holiday" may lead to a significant early release of consumption demand, with travel and consumption expected to surpass previous scales, stabilizing expectations for a strong economic start. Source: Tencent Stocks Selection, GMTEight Editor: Chen Xiaoyi.