A-share closing review | A-share epic short squeeze double creation surged 6%! Analysts sound the alarm bells

On April 8, as tensions in the Middle East quickly cooled down, stock markets in the Asia Pacific region rebounded across the board! A-shares experienced an "epic short-squeeze rally", with the Shanghai and Shenzhen composite indexes soaring by approximately 6%, with over 5,100 stocks in the market rising. Both heavyweight stocks and thematic concepts resonated in the uptrend. By the close of trading, the Shanghai Composite Index rose by 2.70%, the Shenzhen Component Index rose by 4.79%, the ChiNext Index rose by 5.91%, and the Sci-Tech Innovation 50 Index rose by 6.18%. Market turnover significantly increased, with a total turnover of 2.43 trillion yuan in the Shanghai and Shenzhen stock markets, an increase of 820.1 billion yuan from the previous trading day. Although market sentiment has significantly improved, several market experts remind investors not to be overly optimistic too soon. The Chief Investment Office (CIO) of UBS Wealth Management published its institutional viewpoint, stating that while a short-term ceasefire may boost market sentiment, given the high level of uncertainty in the US-Iran conflict, the institution believes that investors should not overly hedge and instead maintain diversification and appropriate hedging to deal with short-term fluctuations while seizing long-term opportunities. Hiroyuki Ueno, Chief Strategist at Sumitomo Mitsui Trust Asset Management, said, "The current situation is a relief for the market, as tensions have temporarily eased. However, the future direction is uncertain, and investors should not be too aggressive." Neil Newman, Head of Strategy at Astris Advisory Japan, took a more cautious stance: "The market's future direction depends on whether the ceasefire can be maintained, and at this point, I am not confident. I believe this is a very fragile temporary rebound and recommend selling poorly performing stocks that are volatile and strategically building positions." Nick Twidale, Chief Market Analyst at AT Global Markets, also warned that the market still faces significant short-term volatility risks: "Any new unexpected news could once again cause significant fluctuations, and investors need to remain vigilant." In terms of the market, AI applications such as AI comics, AI marketing, KNOWLEDGE ATLASAI, media, and DeepSeek concepts all surged, with multiple stocks like BlueFocus Intelligent Communications Group and Hangzhou Anysoft Information Technology hitting their daily limit. Computing power hardware concepts like optical modules, PCBs, liquid cooling, and optical fibers continued to strengthen, with stocks like Shenzhen Xunjiexing Technology Corp. and Suzhou Dongshan Precision Manufacturing hitting their daily limit, while Zhongji Innolight and Eoptolink Technology Inc. reached new all-time highs. The semiconductor concept rebounded, with stocks like Shannon Semiconductor Technology and Shenzhen CECport Technologies hitting their daily limit. Other concepts like gas turbines and transformers, space computing power, satellite internet, and commercial aerospace all saw increases. Popular sectors: 1. AI application concepts surged. AI applications like AI comics, AI marketing, KNOWLEDGE ATLASAI, media, and DeepSeek concepts all surged, with multiple stocks hitting their daily limit. 2. Precious metals concepts strengthened. Concepts like gold, silver, and non-ferrous metals all strengthened, with multiple stocks hitting their daily limit. 3. Computing power hardware concepts continued to rise. Concepts like optical modules, PCBs, liquid cooling, and optical fibers all continued to strengthen, with multiple stocks hitting their daily limit, and some reaching new highs. 4. Oil and gas sector collectively adjusted. The oil and chemical-related concepts performed weakly, with multiple stocks hitting their daily limit. Institutional viewpoints: Huatai: Short-term TACO trading window may have arrived following the relaxation of tensions in the Middle East. Huatai believes that tensions in the Middle East have eased, with Donald Trump agreeing to a two-week suspension of bombings against Iran on April 8, and Iran accepting a ceasefire agreement proposed by Pakistan. Looking at asset performance last night, US stocks rebounded during the day, oil prices dropped significantly, and the VIX index rose before falling back. We believe that a short-term TACO trading window may have arrived. The change from a positive mindset to actual positive action. However, there are still uncertainties ahead, with VIX at a high level indicating that the market has not fully priced in the end of the conflict and requires proper position management. In terms of allocation, the A-share market on April 1 can be seen as a preview of TACO trading, focusing on two directions: the first group is the previously oversold sectors. Industries with high declines in March, including TMT, non-ferrous metals, steel and building materials, and mechanical equipment, are part of the spring market cycle and technology trends, benefiting from the expected rate cuts and external demand. Mechanical equipment is driven by external demand. The second group includes industries with low correlation with oil prices, such as the AI chain and innovative medicine. In the medium term, the issue of energy security is exposed due to the war, so continuing to focus on the power chain may present a buying opportunity in the short term. Huajin Securities: A-shares may have bottomed out in the short term. Currently, the fundamentals may continue to improve, overseas risks are alleviating, emotions are adjusting sufficiently, and policies are leaning towards positive, indicating that A-shares may have bottomed out in the short term. It is advisable to continue to buy on dips in the short term: industries trending upwards due to policies and industry trends such as communication (AI hardware), electronics (semiconductors, AI hardware), new energy (AI power, energy storage), innovative drugs, non-ferrous metals, chemicals, and defense (commercial aerospace). Also, industries with low valuations like coal, electricity, and banking. CITIC SEC: Focus on cloud industry chains and computing power leasing related targets CITIC SEC points out that with the outbreak of Agent applications and multi-modal ecosystems, capital expenditure and computing power demand mismatch, global Token consumption is entering a new phase of accelerated growth. In the next two years, the cloud industry chain is expected to enter a period of simultaneous volume and price increases. In terms of the cloud industry chain, demand is driving up prices, entering a cycle of simultaneous volume and price increase. In terms of computing power leasing, high-quality computing chips are in short supply, leading leasing companies have significant advantages, and high leverage increases high growth certainty. It is recommended to focus on cloud industry chains and computing power leasing related targets. This article was originally published on "Tencent Stock Picks", edited by Jiang Yuanhua.