A-share market review | What happened? A-shares staged a "roller coaster" market, with the three major telecommunications operators charging against the market trend.

On May 18, the A-shares experienced a huge shock in intraday trading, with the three major indices staging a "roller coaster" market. The Sci-Tech 50 Index was strong throughout the day, and the three major telecommunications operators surged against the market. By the close, the Shanghai Composite Index fell by 0.09%, the Shenzhen Component Index fell by 0.20%, and the ChiNext Index fell by 0.36%. The turnover in the Shanghai and Shenzhen markets was 2.89 trillion yuan, a decrease of 450.5 billion yuan from the previous trading day. From a news perspective, there was a sudden storm in the external environment that affected the market trend. Firstly, some analysts pointed out that against the backdrop of continued tension in the Middle East, the surge in international oil prices has exacerbated market concerns about a return of inflation. Expectations of a rate hike by the Federal Reserve have continued to rise, with the CME's FedWatch Tool showing that the market now expects the earliest possible rate hike by the Fed in December this year, with a probability of close to 51%. The market's expectations of a Fed rate hike have continued to rise, leading to the withdrawal of funds from the stock market. Secondly, Goldman Sachs pointed out in its latest report that the AI theme has "entered a relatively scarce phase of catalysts, and it is necessary to protect the profits from the beginning of the year." The valuations of low-quality AI-related stocks have significantly deviated from their fundamentals, and there may be opportunities for short selling. In terms of market performance, the concept of computing power leasing was active, with Xiamen Hongxin Electronics Technology Group Inc. hitting the limit up, and the three major telecommunications operators saw price surges against the market. AI hardware stocks continued to surge, with storage chips and the semiconductor industry chain strengthening once again. Fiber optic cables, optical modules, and PCB concepts were partially active, with several stocks hitting limit up. The oil and gas sector saw an upward trend, with Guizhou Gas Group Corporation hitting the limit up. The power and power grid equipment concept strengthened once again, with stocks like Chongqing Wangbian Electric(Group)Corp. and Beijing Jingneng Power hitting the limit up. The coal concept fluctuated higher, with Liaoning Energy Industry and Sundiro Holding hitting the limit up. Stocks related to Siasun Robot & Automation concept saw oscillations and surges, with stocks like MeiG Smart Technology and BZS hitting the limit up. The commercial aerospace concept also rose, with Ningxia Orient Tantalum Industry and Chongqing Zaisheng Technology Corp. hitting the limit up. On the downside, sports concept stocks fluctuated lower, with several stocks hitting limit down. The pork and breeding sectors continued to decline, with stocks like Shandong Yisheng Livestock & Poultry Breeding and Zhejiang Huatong Meat Products dropping by more than 5%. The chemical fiber concept also declined, with Huafon Chemical falling by more than 8%. The non-ferrous and industrial metal concepts collectively declined, with Jinzhou Yongshan Lithium falling by more than 5%. The banking sector fluctuated lower, with Qilu Bank Co., Ltd. falling by more than 3%. The rare earth concept continued to decline in the afternoon, with stocks like China Rare Earth Nonferrous Metals and China Rare Earth Resources And Technology falling by more than 5%. Gaming stocks also declined, with Mingchen Health falling by more than 7%. Looking ahead, Huaxi analysts stated that overseas inflation exceeding expectations has boosted US bond and Japanese bond yields, and the expectation of monetary tightening, which may temporarily suppress global risk assets. However, the trading activity in the A-share market remains strong, and the short-term adjustment is considered a benign consolidation. Popular sectors: 1. The storage chip concept surged rapidly, with Da Piao Micro 20CM hitting the limit up, and stocks like Toyou Feiji Electronics and ChengBang Syncore Technology also hitting the limit up. 2. The computing power leasing concept was active, with Xiamen Hongxin Electronics Technology Group Inc. hitting the limit up, and stocks like HIACENT, Leon Technology, and Netac Technology all rising by more than 10%. 3. The CPO concept remained active, with Hgtech hitting the limit up and Shenzhen Everbest Machinery Industry hitting two limit ups in three days. 4. The oil and gas stocks strengthened against the market, with Guizhou Gas Group Corporation hitting three limit ups in four days, and China Petroleum Engineering hitting the limit up. Institutional views: -Huaxi: After accumulating energy, the market will see another summer offensive as the overseas inflation exceeded expectations, pushing up US and Japanese bond yields and tightening expectations for monetary policy, which may exert short-term pressure on global risk assets. However, the trading activity in the A-share market remains strong, and the short-term adjustment is considered a benign consolidation. In this round of global technology market, benefiting from the booming AI industry and continuous profit realization, the profit expectations for the US technology sector have been significantly raised since the beginning of the year. The valuations of the US and A-share technology indices are still in a reasonable range, indicating that the market's intrinsic resilience is strong. After stress testing, it is expected that funds will further concentrate in the direction of high prosperity. In terms of industry allocation, the recommendation is to focus on: 1. High prosperity in technology growth track: computing power hardware, new energy, Siasun Robot & Automation, etc.; 2. Upstream resources related to energy self-sufficiency: chemicals, etc. -Huaan: Be cautious of the possibility of liquidity shocks in the short term as US inflation in April exceeded expectations, with Kevin Warsh, who previously emphasized controlling inflation as the main goal, officially taking office as Chairman of the Federal Reserve, and the dovish Director Milan submitting his resignation to the Fed. The market is betting that the Fed may accelerate its shift to hawkishness, which may temporarily curb global market risk appetite. Despite the continued improvement in April inflation data, mainly due to input factors, domestic demand still needs to be boosted, confirmed by the weakening credit in financial data. However, considering the current strong exports and the continued improvement in overall price levels, the necessity for implementing general monetary policy easing tools further decreases, with signs in the execution report indicating an intention to marginally tighten liquidity. Therefore, in the short term, one should be cautious of the possibility of liquidity shocks. -Guotai Haitong: The introduction of computing power futures heralds a new narrative, and the long-term logic of industry expansion continues Guotai Haitong released a research report stating that CME plans to launch computing power futures, anchored to the GPU on-demand rental price index, reflecting that the service boundaries of the futures market are extending from traditional commodities to emerging industries. For futures companies, the addition of new products not only brings incremental space for trading volume, fees, and customer equity accumulation but more importantly broadens the industry boundaries and risk management scenarios for serving customers, promoting business upgrading from traditional brokerage channels to comprehensive risk management services for industrial customers, with the long-term logic of industry expansion continuing.