A-share midday report | Continues to rally! The Shanghai Composite Index rose 0.88% to return to 3900 points in half a day, and the power sector collectively surged.

On Wednesday, influenced by Trump's signal to initiate US-Iran negotiations, geopolitical risk premiums fell, global risk assets rebounded across the board, Asian Pacific stock markets strengthened, precious metals rebounded, while crude oil fell significantly due to cooling expectations of war. The recent Middle East drama is playing out like a "split personality", with capital markets being tossed around like a roller coaster. The current situation is in a quantum superposition of "fight and talk, fight and talk", so it is recommended that all investors fasten their seat belts. After all, in the face of Trump's tweets, any analysis is just paper tigers... In the early trading session, A-shares rose and then fell back, with the Shanghai Composite Index returning above 3900 points, and the Growth Enterprise Index and the Shenzhen Component Index both rising by over 2%. As of the midday close, the Shanghai Composite Index rose by 0.88%, the Shenzhen Component Index rose by 1.37%, and the Growth Enterprise Index rose by 1.26%. The total turnover of the Shanghai and Shenzhen stock markets in the first half of the day was 1.47 trillion yuan, an increase of 150.5 billion yuan from the previous trading day. On the market, the power sector continued to strengthen, with the green power direction leading the way, with over ten stocks such as Huadian Liaoning Energy Development, Guangdong Shaoneng Group, and Guangdong Electric Power Development all hitting the daily limit; the fiber optics and optical module concepts continued to rise, with stocks like Tongding Interconnection Information and Dongguan Mentech Optical & Magnetic both hitting the limit; the token concept broke out, as stocks related to computing power surged, with NET263 Ltd. and Aurora Optoelectronics hitting the ceiling; the tourism and hotel sector rose, with Guilin Tourism Corporation hitting the limit; the sports concept continued to strengthen, with China Sports Industry Group and Shuhua Sports hitting the limit; the semiconductor chip industry chain was active, with Both Engineering Technology and Anhui Guofeng New Materials hitting the limit. In terms of declines, the oil and gas sector opened lower across the board, with KLGF and Tong Petrotech Corp. falling by over 5%; the photovoltaic equipment concept fluctuated weaker, with companies like Ailu Energy and Ningbo Deye Technology falling by over 5%; the coal sector showed a weak trend, with China Coal Energy falling by over 5%. Looking ahead, CICC believes that the current period may be the relative low point for A-shares in the medium term, and the deep adjustment has brought about a good opportunity for layout. Guosen believes that in the short term, the market style may re-balance during the fluctuations, and some undervalued "old stable assets" may temporarily have an advantage. Hot sectors: 1. Token concept fermentation, computing power stocks soar The token concept broke out, computing power stocks soared, with NET263 Ltd. and Aurora Optoelectronics hitting the ceiling; the tourism and hotel sector rose, with Guilin Tourism Corporation hitting the limit. Commentary: According to the National Bureau of Statistics, China's daily Token usage is 100 billion as of early 2024, rising to 100 trillion by the end of 2025, and surpassing 140 trillion in March this year, a growth of over a thousand times in two years. 2. The power sector explodes The power sector exploded, with the green power concept leading the way, with over ten component stocks hitting the limit, including Huadian Liaoning Energy Development with an 8-day limit, Guangdong Shaoneng Group with a 6-day limit, and Guangdong Electric Power Development with a 6-day limit. Commentary: CITIC SEC pointed out that "green fuel" and "AI-electricity collaboration" have been included in the government work report, corresponding to China's energy independence strategy and AI competition strategy. With the dual rigid demand for green fuel preparation and green electricity supply for data centers, it is expected that by 2030, these two demands could drive demand for nearly 465GW of wind turbines, boosting the super prosperity of the wind power sector. 3. CPO concept active The CPO concept performed actively, with Dongguan Mentech Optical & Magnetic, Shanghai Allied Industrial Group, and Suzhou K-Hiragawa Electronic Technology all hitting the limit. Commentary: In terms of news, the US stock market's optical communication concept led the way, with Lumentum rising by 10% and hitting a historical high intraday, while Coherent rose by 6.78%. In addition, China has set a new record in optical communication transmission, achieving a real-time bidirectional transmission capacity of 2.5 petabits per second (Pb/s) on a 24-core single-mode optical fiber over 10.3 kilometers for the first time. 4. Semiconductor equipment concept strengthens The semiconductor chip industry chain was active, with Both Engineering Technology and Anhui Guofeng New Materials hitting the limit. Commentary: In terms of news, SK Hynix announced plans to raise approximately $10 billion through a listing in the United States. SK Hynix will use the potential proceeds to build artificial intelligence infrastructure, such as establishing a semiconductor cluster in Yongin, South Korea, and expanding the production capacity of storage products. Institutional views: CICC: The current period may be the relative low point for A-shares in the medium term, and the deep adjustment has brought about a good opportunity for layout CICC believes that the current period may be the relative low point for A-shares in the medium term, and the deep adjustment has brought about a good opportunity for layout. Although there is still a certain degree of uncertainty in the short-term trend, after the adjustment, the market's risks have been further released, and valuations are at relatively reasonable levels. In the medium term, there has been no fundamental change in the macro environment, and the logic of supporting the "steady progress" of the A-share market still holds, with the risk release and the downward adjustment bringing about good opportunities for allocation. Guosen: In the short term, the market style may re-balance during the fluctuations Guosen believes that in the short term, during the fluctuations, the market style may re-balance, and some undervalued "old stable assets" may temporarily have an advantage. Looking at the medium-term trend, areas representing economic transformation and upgrading and security, such as artificial intelligence (AI) and advanced manufacturing, remain the core directions for allocation. These areas have real industrial policies and fundamental support, and are more likely to lead the market into a new uptrend after the adjustment. Guotai Haitong: From stagnant hedging to Taco 2.0 Affected by the midterm elections, the impact of market risk and inflation risk on Trump may significantly increase, leading to a possible final compromise or withdrawal of troops by the US, i.e., Taco 2.0. Most Asian economies are net importers of oil, similar to the US stock market, so if there is a turning point in the Iran conflict, emerging market stocks may also be major beneficiaries. This article is reprinted from "Tencent Self-selected Stocks", GMTEight Editor: Wang Qiujia.