A-share midday review | Rise and fall! The "drinking and medication" market reappears, can A-shares continue to rise?

On April 23, the three major indexes of A-shares opened higher and then trended lower in the morning session. By midday closing, the Shanghai Composite Index fell by 0.79%, the Shenzhen Component Index fell by 1.53%, and the ChiNext Index fell by 1.83%. The total turnover of the Shanghai and Shenzhen stock markets in the morning session was 1.95 trillion yuan, an increase of 367.3 billion yuan from the previous trading day. The hotspots on the market were relatively chaotic, with over 4300 stocks falling across the board. In terms of sectors, defensive sectors were strong, with the consumer goods sector performing well, leading to a surge in liquor and retail concepts, with Anhui Yingjiagongjiu and Zhongxing Shenyang Commercial Building Group hitting limit-up. The banking sector experienced volatile gains, with Bank Of Guiyang rising over 7%. The oil and gas sector quickly rose, with Shandong Molong Petroleum Machinery hitting limit-up. The gas turbine sector was active, with Liaoning Fu-An Heavy Industry hitting limit-up, and Anhui Yingliu Electromechanical reaching limit-up, reaching a historical high. Innovative pharmaceutical concept stocks were also active at one point. On the downside, CPO and other computing hardware stocks collectively adjusted, with stocks like Sai MicroElectronics Inc., Optowide Technologies, and Advanced Fiber Resources seeing significant declines, and Shenzhen Everbest Machinery Industry hitting limit-down. As for individual stocks, the morning session saw the leading optoelectronics module company Zhongji Innolight rise by over 3%, becoming the second computing hardware stock to break through a total market value of over 1 trillion yuan after Foxconn Industrial Internet. The stock has risen by over 900% since April 22 last year. According to 21st Century Business Herald, comprehensive institutional views suggest that the logic supporting the market's upward trend is gradually becoming clearer: on one hand, with external disturbances fading, the market's focus will return to fundamentals, and A-share earnings growth is expected to improve; on the other hand, major index valuations are still relatively low globally, and the steady inflow of funds from wealth management and ETFs will collectively support the market in the second quarter. In this context, resource industries, technology sectors, and cyclical industries are seen as key areas for investment. At the same time, whether foreign capital will return to A-shares has become another major focus. In this global turmoil, A-shares have demonstrated significant independence and resilience to declines, with global attractiveness as an investment destination continuing to shine. This is attributed to the "security premium" provided by China's robust economic operation, energy independence, and complete industrial chains. Looking ahead, Changjiang believes that as the impact of conflicts on A-shares diminishes, an increase in risk appetite may help the A-share index break through previous highs in the second quarter. Hot Sectors 1. Liquor sector shakes and rebounds The liquor sector was active in the morning session, with Anhui Yingjiagongjiu hitting the limit-up, and stocks like Hebei Hengshui Laobaigan Liquor, Shanxi Xinghuacun Fen Wine Factory, Anhui Gujing Distillery, and Jiangsu King's Luck Brewery Joint-Stock following suit. Analysis: Anhui Yingjiagongjiu released its first-quarter report for 2026, with a total operating income of 22.30 billion yuan, an 8.91% year-on-year increase from the same period last year, and a net profit attributable to the parent company of 8.35 billion yuan, a 0.73% increase year-on-year from the same period last year. 2. Gas turbine sector is active The gas turbine sector was active in the morning session, with Liaoning Fu-An Heavy Industry hitting limit-up, having risen for 3 consecutive days, and Anhui Yingliu Electromechanical reaching a limit-up and hitting a historical high. Analysis: Overnight, American energy equipment manufacturer GE Vernova reported a 96% increase in profit in the first quarter, with orders reaching 18.3 billion US dollars, a 71% year-on-year increase, and the stock price surged by 13.75% to hit a historical high, with a market value exceeding 300 billion US dollars. Institutional Views Changjiang: Impact of conflicts diminishing, A-shares may break through previous highs Dai Qing, Chief Strategist at Changjiang, pointed out that as the Strait of Hormuz gradually opens to navigation and oil prices peak and decline, the "second-order derivative" of market pessimism is showing signs of a turning point. After the impact of conflicts on A-shares diminishes, an increase in risk appetite may help propel the A-share index to break through previous highs in the second quarter. With the fading of external disturbances, the market is expected to focus more on fundamentals. Dai Qing believes that the overall profit impact on A-shares from conflicts is limited. Structurally, upstream resources, security-related fields (such as new energy, machinery, and defense) and export industries are expected to benefit, and annual profits may not necessarily be downgraded. UBS Securities: A-share earnings growth expected to further increase from last year Meng Lei, China Stock Strategy Analyst at UBS Securities, expressed a more optimistic view, believing that A-share earnings growth is expected to further increase from last year. The core reasons for this include three aspects: first, the year-on-year turnaround of the producer price index (PPI) in March, and the closely related nature of non-financial enterprise revenue and PPI in A-shares, which will accelerate profit growth. This, combined with the robust performance of the financial sector, will drive overall profit acceleration in A-shares; second, the significant improvement in industrial enterprise profits in January and February, with the industrial sector in the first quarter of A-shares expected to achieve double-digit growth; third, the significant upward revision of profit expectations for the Shanghai and Shenzhen 300 index in recent times, similar to the performance in recovery years such as 2017, 2019, and 2021. Therefore, UBS tends to judge that the current A-shares are in a comprehensive, large-scale environment of upward profit expectations. Huajin Securities: Market may be relatively strong in April and May Deng Lijun, Chief Strategist at Huajin Securities, believes that the market may be relatively strong in April and May. In April, progress in US-Iran negotiations may ease tensions, coupled with economic and profit fundamentals support, the market is expected to see a recovery. In May, if geopolitical risks further diminish, and with the possibility of Trump visiting China, risk appetite may continue to rise. After entering June, the progress of the US midterm party primaries may increase Sino-US game risks, while changes in US inflation data may disrupt liquidity expectations, leading to increased market volatility. Guotai Haitong: The upward momentum of the Chinese stock market is far from over Looking ahead, the upward momentum of the Chinese stock market is far from over, and the Chinese stock market is expected to reach new highs in the future. Firstly, after '924', concerns about internal issues have reduced; in 2026, international disturbances mark an important turning point and reflect the strength of Chinese industries, both in terms of technological advancement and the global manufacturing industry, leading the international community to reassess and reevaluate Chinese assets. Secondly, with the emergence of risk boundaries and constraints, the market's lingering concerns have been alleviated, the expectations for profit downgrades have mostly ended, and the market has returned to internal development logic. Recent acceleration in capital market reforms implies a policy attitude that consolidates the stable and positive trend of the capital market. The clarification of the bottom is expected to strengthen the current background of increasing demand for social asset management and the influx of incremental funds into the market. Lastly, with fiscal stimulus and rising inflation in 2026, traditional industries are gradually stabilizing; considering the vast market demand and the significant gap in computing power between China and the US, investment in China's emerging industries is expected to accelerate; in addition, China's competitive manufacturing industry is going global, with multinational companies emerging and ROE increasing, leading to upward revisions in China's growth expectations for 2026. The Chinese stock market will not stop here, so it is important to maintain confidence. In terms of allocation, emerging technology is the main theme, and value will also see positive developments. This article is reprinted from "Tencent Self-selecting Stocks". Editor: Wang Qiujia.