A-share market review | Shanghai Composite Index fell by 0.74%, trading volume shrank again! Multiple stocks in the innovative pharmaceutical sector hit the limit up.

President Trump of the United States made a national television address on the Iran conflict. The market had originally bet that he would send a signal to cool down the situation, but instead he delivered a new threat: he announced that in the next two to three weeks, there will be "extremely fierce strikes" against Iran. An Iranian military spokesperson stated that bigger, broader, and more destructive attacks are on the way. The war will continue until the "enemy surrenders and permanently regrets." The oil prices reflected the market's initial reaction: Brent crude futures extended gains to 7%, spot gold fell below $4600 per ounce; the Asia-Pacific stock markets were under pressure, and US stock futures also declined. A-shares synchronized adjustments today, with the ChiNext index showing a significant decline. Funds focused on oil, gas, banks, and innovative pharmaceuticals. The market's total turnover was only 1.8 trillion yuan, over a hundred billion less than the previous trading day, with over 4300 stocks dropping in both markets. Looking at the market, the pharmaceutical sector saw a contrary rise, with Tianjin Tianyao Pharmaceuticals up for 5 consecutive days, Beijing Sl Pharmaceutical up for 7 days, PKU HealthCare Corp., and Guizhou Yibai Pharmaceutical up for 2 consecutive days. The oil and gas stocks were active, with China Petroleum Engineering, Hunan Heshun Petroleum, Ningbo Bohui Chemical Technology, Beiken Energy Group, and Shanxi Blue Flame Holding all hitting the limit up. The fiber optic concept saw repeated strength, with Shandong Xinneng Taishan Power Generation up for 8 consecutive days, Jiangsu Zhongli Group up for 10 days, Yangtze Optical Fibre And Cable Joint Stock, Shenzhen SDG Information, and Hengtong Optic-Electric all hitting historical highs. On the downside, the computing power leasing concept saw a collective adjustment, with stocks like Guangdong Qunxing Toys Joint-stock, and Jiangsu Lettall Electronic seeing significant declines. Looking at individual stocks, there were 1052 gainers, 4378 losers, and 67 stocks maintaining their gains. There were 32 stocks that hit limit up, and 20 stocks that hit limit down. At the close, the Shanghai Composite Index fell by 0.74% to 3919.29 points, with a turnover of 811.9 billion yuan; the Shenzhen Component Index fell by 1.60% to 13486.94 points, with a turnover of 103.1 billion yuan. The ChiNext Index fell by 2.31% to 3172.65 points. Market Trends Today, the main funds focused on grabbing power grid equipment, chemical pharmaceuticals, energy metals and other sectors. Stocks like Jiangsu Zhongchao Holding, Jiangsu Zhongli Group, and Shandong Xinneng Taishan Power Generation were among the top net inflows. News Recap 1. Oil prices rise, memory prices soar: Home appliance industry starts a price increase trend in April, with the highest increase of up to 20%. 2. Trump: Stronger firepower strikes against Iran in the coming weeks. President Trump stated in a speech that in the next few weeks, there will be stronger firepower strikes against Iran. Trump said that Iran's missile and drone capabilities have been "greatly weakened", with few weapons factories and rocket launch sites remaining. Trump also emphasized that the strikes against Iran do not require assistance from other countries. He also stated that the nuclear threat to the United States is huge, and the Obama administration has an undeniable responsibility for Iran's nuclear threat to the United States today. 3. National Medical Products Administration: by 2030, the initial formation of an integrated innovative system of drug regulation and artificial intelligence. On April 2nd, the National Medical Products Administration issued the "Implementation Opinions on" Artificial Intelligence + Drug Supervision ". The opinions propose that by 2030, there will be an initial formation of an integrated innovative system of drug regulation and artificial intelligence, the operation and management mechanism of "Artificial Intelligence + Drug Supervision" will be basically formed, and the computing power support will become more intensive and efficient, thereby forming high-quality data sets, vertical large models, and smart bodies that meet the needs of intelligent regulation, effectively applying artificial intelligence in review and approval, supervision and inspection, testing and monitoring, government services, and other scenarios, significantly improving efficiency through human-machine cooperation, and taking the full lifecycle of digital intelligence regulation capabilities to a new level. By 2035, a smart drug safety governance new pattern driven by digital empowerment, intelligent agility, autonomous control, and ecological coordination will be basically formed. Market Judgment 1. China Galaxy Securities: The market is expected to enter a stage of oscillation and structural rotation. China Galaxy Securities' chief strategy analyst, Yang Chao, believes that with the start of ceasefire talks between the US and Iran and the gradual elimination of uncertainties surrounding financial reports, the market is expected to enter a stage of oscillation and structural rotation. The logic of policy support, capital inflows, and the reassessment of Chinese assets remain unchanged. The downward space for A-shares is relatively limited, and it is recommended to adopt a strategy focusing on performance and timing. In terms of specific allocations, Yang Chao recommends focusing on three main directions: strategic resource value reassessment sectors, with increased market attention to inflation expectations and geopolitical security, gold, copper, rare earths, key materials, etc., are expected to receive valuation reassessment; technology self-reliance and new quality productivity sectors, with several heavyweight technology summits in April, expected to catalyze the AI computing power, light module, semiconductors, high-end manufacturing, humanoid Siasun Robot & Automation, and low-altitude economy, etc.; defensive sectors like high dividend and stable cash flow, in the face of market oscillation, sectors with high dividend, low volatility, and stable cash flow are still optimal for base allocation, it is recommended to focus on utilities, environmental protection, CXO outsourcing, and other related sectors. 2. CITIC SEC: Overseas rate cuts + domestic financing improvement, continuous optimism on the pharmaceutical industry chain for comprehensive recovery of demand. CITIC SEC's research report stated that domestic innovative drug BD (Business Development) frenzy has driven downstream demand back, with the proportion of equity financing in enterprise funding dropping significantly, BD deals accounting for nearly 40%, and BD total amount exceeding $60 billion in the first quarter of 2026, nearly half of the full year of 2025. Looking at specific sectors, small molecule CDMOs with China's supply chain advantages have increased their market share, combined with stable domestic supply under the conflict in the Middle East, are expected to receive more orders. Preclinical and clinical CROs are expected to see increased volume and price lift due to the improvement in financing and the transmission of early research demand. Although the short-term performance of the research service and upstream sectors were affected by exchange rate fluctuations in the fourth quarter of 2025, the expected early research demand is expected to continue in 2026 with the revenues of top companies likely to grow by over 20%, and current valuations are reasonable. Recommendations include focusing on: 1. Leading companies in CXO outsourcing; 2. Key companies in the preclinical and clinical CRO segments; 3. Companies in the research service and upstream sectors with relatively reasonable valuations. 3. Huaxi: Continue to explore undervalued sectors. The low valuation style continued to dominate the first quarter. The market's overall valuation is high and risk appetite is under pressure, with funds showing anxiety towards highs. However, the logic of stable market remains, and directly leaving the market may lead to missing out on rebound benefits. In this situation, funds tend to explore undervalued opportunities for recovery. In the second quarter, continue to explore undervalued sectors. From the perspectives of PE and PEG, power equipment and media are worth further attention, with PE (TTM) percentiles since 2016 being 67% and 68% respectively, and PEG both being 0.91. From the PB perspective, focus on agriculture and animal husbandry, and big financials, with PB percentiles basically lower than 20%, and ROEs all higher than 8%. Meanwhile, the PB percentiles for non-ferrous metals and coal are relatively high, with market trends depending on whether inflation can continue to exceed expectations. This article is reprinted from Tencent's "Self-selected Stocks". GMTEight editor: Liu Jiayin.