A-share midday review | The "tug-of-war" between the US and Iran sparks a massive fluctuation in A-share "electrocardiogram"! The index sees a significant differentiation, with green energy and military industries sectors strengthening.

The US and Iran are "tearing apart" the global market. In the morning, the three major indexes of A-shares experienced a huge shock, with the Shanghai Composite Index rising more than 1% and the ChiNext Index falling more than 2% at one point. Small and medium-cap stocks showed a stronger trend, with the micro-cap stock index rising more than 2%. By the midday closing, the Shanghai Composite Index rose by 0.95%, the Shenzhen Component Index rose by 0.26%, and the ChiNext Index fell by 0.79%. The turnover in the Shanghai and Shenzhen markets was 1.32 trillion yuan in the first half of the day, a decrease of 143.2 billion yuan compared to the previous trading day. In terms of the market, hotspots are rapidly rotating, with the green electricity and power sectors in the new energy industry chain continuing to be strong. Stocks such as Huadian Liaoning Energy Development, Wuxi Huaguang Environment & Energy Group, and Shenzhen Topraysolar all hit the limit up. The electric power equipment concept was actively trading, with Beijing Creative Group and Jiangsu Zhongli Group hitting the limit. The port and shipping sector fluctuated and rose, with Nanjing Tanker Corporation hitting the limit up. The CRO and weight loss drug concepts saw gains, with Jiangxi Fushine Pharmaceutical and Ningbo Menovo Pharmaceutical hitting the limit up. The environmental protection sector was active, with Wuxi Xuelang Environmental Technology hitting the limit up. The chemical fiber sector rose strongly, with Zhongfu Shenying Carbon Fiber and Chtc Helon Co., Ltd. hitting the limit or rising more than 10%. The computing power leasing concept hit bottom and rebounded, with Leon Technology and Beijing Transtrue Technology Inc. hitting the limit or rising more than 10%. Military stocks collectively rose, with Anhui Greatwall Military Industry hitting the limit. Computing hardware concepts such as light modules and PCBs rebounded, with Nanya New Material Technology rising nearly 10%. On the downside, most stocks showed a general rise, with only a few sectors showing a decline. Oil and gas stocks were in a correction, with Geo-Jade Petroleum Corporation falling more than 5%. The majority of photovoltaic equipment stocks fell, with Changzhou Shichuang Energy and Suzhou Maxwell Technologies falling by more than 6%. The humanoid Siasun Robot & Automation concept fluctuated and fell, with Wolong Electric Group falling more than 7%. In addition, sectors such as chemicals and coal performed poorly. Recent geopolitical instability has caused concerns for many investors. How should investors navigate the market's uncertainty? Bao Xiaohui, Chairman of Changle Asset Management, suggests that the key for ordinary investors is to maintain a stable mindset and not be swayed by panic emotions. The overall operation should be stable, with good control of positions, avoiding frequent trading, and even temporarily staying away from the market to avoid being influenced by short-term fluctuations. The recent sharp decline is essentially a market washout, digesting excess speculation and negative news. Once the panic sentiment is released, the market will naturally stabilize and rebound gradually. Huaxia Fund provides two signals to determine whether A-shares are stabilizing: if the trading volume shrinks to below 1.7 trillion yuan, it indicates the exhaustion of selling pressure; and if there is a large inflow of funds into the broad-based ETF, it indicates that large funds are supporting the market. Ping An Securities also stated that in the short term, the US-Iran conflict remains the main pricing anchor for global assets. Until the situation becomes clear, market volatility may continue, with a defensive bias (dividends/undervaluation). Hot Sectors 1. Green electricity continues to be strong The green electricity, power, and other new energy industry chains continued to be strong, with stocks like Huadian Liaoning Energy Development, Wuxi Huaguang Environment & Energy Group, and Shenzhen Topraysolar all hitting the limit up. The electric power equipment concept was active, with Beijing Creative Group and Jiangsu Zhongli Group hitting the limit. 2. Military sector strengthens The military sector strengthened, with Anhui Greatwall Military Industry, Hunan Tyen Machinery, and Jianshe Industry Group all hitting the limit. 3. CRO and weight loss drug concepts gain The CRO and weight loss drug concepts gained, with Jiangxi Fushine Pharmaceutical, Ningbo Menovo Pharmaceutical hitting the limit, and Kexing Biopharm, Guangdong Taienkang Pharmaceutical, Beijing Sun-Novo Pharmaceutical Research following suit. 4. Shipping sector fluctuates and rises The shipping sector fluctuated and rose, with Nanjing Tanker Corporation hitting the limit up, and COSCO Shipping Energy Transportation, China Merchants Energy Shipping, GH SHIPPING following suit. Institutional Views Guotai Haitong: Geopolitical impact on A-shares is short-term but not deep-rooted Guotai Haitong stated that recent geopolitical instability has caused concerns for many investors. However, they believe that the impact of geopolitics on A-shares is short-term and not deep-rooted. The logic of the Chinese market/assets has advantages and differentiation. From a global perspective, A-shares have always maintained relatively smaller declines. The long-term direction of A-shares is always determined by their own internal core logic. They often say "confidence is more valuable than gold", and in this period where even gold has temporarily lost its safe-haven status and continues to weaken, perhaps more and more target assets are quietly falling back to the critical point - let us witness when the turning point will appear together. Western: Large fluctuations provide good opportunities for the next main themes Western stated that the recession in the US intensified suddenly after the US-Iran war, as reflected in the rapid increase in market volatility in recent times. However, large fluctuations provide good opportunities for the next main themes. The greater the volatility, the more one should calmly consider the trend. They recommend increasing positions in the PPI chain sectors of oil and chemicals in the first half of the year, while also focusing on Chinese manufacturing sectors with the ability to overtake in the curve (photovoltaics, wind power, energy storage, engineering machinery, etc.); in the second half of the year, shift focus to the CPI chain sectors of liquor, as well as emerging technologies and gold that will benefit from the return of the US dollar index. Ping An Securities: Volatility may continue in the equity market until the situation becomes clear Ping An Securities pointed out that the short-term US-Iran conflict remains the main pricing anchor for global assets. Volatility in the equity market may continue until the situation becomes clear, with a defensive bias (dividends/undervaluation). In the medium to long term, the security attributes of Chinese assets are still expected to benefit, focusing on policy support and directions with clear economic prospects: firstly, cyclical sectors benefiting from rising commodity prices and strategic security demands (energy, chemicals, etc.); secondly, manufacturing sectors with low capacity cycles and prospects benefiting from global inventory restocking (power equipment, machinery, etc.). This article is reprinted from "Tencent Self-selection Stocks", GMTEight Editor: Wang Qiujia.