A-share midday review | Middle East warfare burns back to A-share! The Shanghai Composite Index fell 0.73% in the morning. Who else is to blame for the adjustment?

On April 9th, A-shares opened lower and fluctuated in the morning session, with over 4400 individual stocks falling in the entire market. As of the midday close, the Shanghai Composite Index fell by 0.73%, the Shenzhen Component Index fell by 0.31%, and the ChiNext Index fell by 0.67%. The total trading volume in the Shanghai and Shenzhen markets in the first half of the day was 1.43 trillion yuan, a decrease of 446.6 billion yuan compared to the previous trading day. It was found that there were two main factors contributing to the market correction: First, the uncertainty of the US-Iran ceasefire agreement re-emerged: Trump's repeated actions, not acknowledging Iran's "10-point plan" as a basis; Israel attacking Lebanon; and the closure of the Strait of Hormuz. The "ceasefire dividend" that the market had priced in was proven false, leading to a rapid contraction in risk appetite. Second, the violent rebound in A-shares yesterday, along with the high expectations for the "April recovery" in the market, had accumulated significant gains, making geopolitical uncertainties a catalyst for profit-taking. However, Shenwan Hongyuan Group believes that the fundamental basis for the healthy development of the A-share market remains unchanged. The balance of the A-share market's investment and financing functions has been significantly optimized, and the improvement in the quality of listed companies has made investment returns more diversified. Once external disruptive factors ease, the internal stability of A-shares will gradually recover, leading to a shift from quantitative to qualitative changes and initiating a positive cycle of incremental funds. In terms of market performance, concepts related to computational hardware such as optical chips, optical modules, optical fiber cables, PCBs, and liquid cooling continued to strengthen. Specific stocks like Sichuan Huiyuan Optical Communications and Suzhou Dongshan Precision Manufacturing saw significant gains. Conversely, concepts related to AI applications, financial technology, cross-border payments, stablecoins, and internet finance collectively declined. In terms of popular sectors: 1. Concepts related to computational hardware like liquid cooling continued to strengthen, with specific stocks performing well. 2. Concepts related to indigenous hard technology like semiconductors continued to rise. 3. Concepts related to rare earth permanent magnets rose against the trend. Institutional perspectives: Shenwan Hongyuan Group believes that the basic foundation for the healthy development of the A-share market remains unchanged. CITIC SEC noted that the strategic direction of the Iran situation is gradually becoming clear, which will impact global risk assets. Guotai Haitong highlighted that the new driving force for the rise of the Chinese market comes from China's inherent growth logic. China Securities Co., Ltd. continues to be optimistic about the AI sector, especially in the field of optical communication. This article was originally published on "Tencent Stock Selection" and was edited by Wang Qiujia.