A-share midday review | Three factors trigger A-share selling pressure! Why is the Sci-Tech Innovation 50 "falling the hardest"? Securities stocks leading the way in supporting the market

On May 26, the three major indexes of A-shares collectively consolidated, with the Sci-Tech Innovation 50 Index dropping nearly 3% in the morning session. By midday, the Shanghai Composite Index fell by 0.84%, the Shenzhen Component Index fell by 0.87%, the ChiNext Index fell by 0.51%, and the Sci-Tech Innovation 50 Index dropped by 2.88%. The total turnover of the Shanghai and Shenzhen stock markets was 2.16 trillion yuan in the first half of the day, an increase of 81.9 billion yuan compared to the previous trading day. According to public market data and market trends, the following three factors triggered selling pressure in A-shares: Firstly, the semiconductor sector has been overcrowded with trading, leading to panic selling at any sign of movement. Data from Wind shows that from April 1 to May 22, the net inflow of margin financing in the semiconductor sector exceeded 96.4 billion yuan, making it the industry with the highest net inflow of leveraged funds. The Guangfa Fund advisory team pointed out that if there is fluctuation in the market or a change in trend, this capital may be concentrated and accelerate selling, easily triggering drastic fluctuations in the sector. Secondly, announcements of share reductions have dampened sentiment. Recently, Advanced Micro-Fabrication Equipment Inc. China, Montage Technology, and other semiconductor companies disclosed shareholder reduction plans, dampening short-term speculative sentiment and prompting some funds to secure profits. Thirdly, the market has not weakened overall but has shown clear style rotation. Stimulated by news like the "listing of Usun Technology", funds flowed out of high-priced chip stocks and into low-priced humanoid Siasun Robot & Automation and consumer electronics sectors. This "robbing Peter to pay Paul" operation further drained liquidity from leading technology stocks. It is worth noting that the Sci-Tech Innovation 50 Index, which just hit a historical high yesterday, saw the biggest drop today, dropping by over 3% at one point during the day. Market analysis believes that the Sci-Tech Innovation 50 Index is the leader of this "hard-tech bull market", and the sharp drop is mainly due to the "concentration of constituent stocks." Key stocks in the index, such as Semiconductor Manufacturing International Corporation and Cambricon in the semiconductor and AI computing power sectors, collectively corrected today. Leading stocks like Semiconductor Manufacturing International Corporation and Montage Technology took the lead in the decline, directly dragging down the performance of the index. In terms of sector performance, the motor, PEEK, and humanoid Siasun Robot & Automation sectors were active against the trend, with Shenzhen WOTE Advanced Materials hitting the daily limit up; the financial sector, including brokerage firms, insurance, and banks, rose, with Guangdong Golden Dragon Development Inc. hitting the limit up at one point. Chip stocks were partially active, with Tianshui Huatian Technology and WG Tech (JiangXi) Group hitting the limit up; gold, non-ferrous metal sectors surged, and Zhaojin International Gold hit the limit up; the duty-free shop, liquor, and other large consumer concept sectors strengthened, with Better Life Commercial ChainShare and Zhongbai Holdings Group hitting the limit up; airport transportation, steel, and central special assessment sectors showed some performance. On the flip side, the semiconductor industry chain saw widespread declines, with lithography machines, storage chips, Huawei Ascend technologies, and others leading the decline. Companies in this sector such as ChengBang Syncore Technology and Hangzhou Landscaping hit the limit down, with Semiconductor Manufacturing International Corporation falling by over 6%. The computing power leasing concept continued to slide, with Dawei Technology (Guangdong) Group hitting the limit down; fiber optic cables, optical modules, and other computing hardware stocks also corrected, with multiple stocks like Xiamen Guang Pu Electronics and Gl Tech Co., Ltd. falling by over 10%; the power grid equipment, ultra-high voltage, and other sectors adjusted, with Guizhou Taiyong-Changzheng Technology hitting the limit down; the commercial aerospace sector weakened, with HuNan Boyun New Materials hitting the limit down; and the STAR Market new stocks, military electronic, quantum technology, nuclear fusion, AI applications, and other sectors all declined. Looking ahead, China Securities Co., Ltd. believes that the short-term market will likely continue with a dominant focus on technology and structural rotation. The strong trends of the Sci-Tech Innovation 50 Index and the ChiNext Index remain unchanged, with continued support for main themes like semiconductors and computing power hardware. However, in a differentiated market, non-mainstream sectors may find it difficult to find systematic opportunities. Popular Sectors: 1. Securities sector saw a strong rise: Securities firms, insurance companies, and banks all rose, with Guangdong Golden Dragon Development Inc. hitting the limit up, and China Securities Co., Ltd., CMSC, EB SECURITIES, and others trending higher. Comment: Analysts at China Post Securities believe that the strong performance of securities firms does not align with their high growth in the first quarter and the active market environment, potentially indicating some valuation recovery space. 2. Strong performance in the consumer sector: The duty-free shop and liquor sectors showed strength, with Better Life Commercial ChainShare and Zhongbai Holdings Group hitting the limit up. Comment: According to the Ministry of Commerce, from January to April, the consumption market showed a stable trend, with a 3.2% year-on-year growth in both goods and services retail. 3. Active performance in the Siasun Robot & Automation concept: The Siasun Robot & Automation concept showed strength against the trend, with Shandong Daye, Shenzhen WOTE Advanced Materials hitting the limit up, and Ningbo Zhongda Leader Intelligent Transmission, Beijing Capital Development touching the limit up. Comment: The Shanghai Stock Exchange Listing Committee is set to hold a review meeting on June 1 to consider the listing of Usun Technology Co., Ltd. (IPO). Institutional Views: China Securities Co., Ltd.: Short-term market likely to continue with a focus on technology and structural rotation Looking ahead, the short-term market will likely continue with a dominant focus on technology and structural rotation. The strong trends of the Sci-Tech Innovation 50 Index and the ChiNext Index remain unchanged, with continued support for main themes like semiconductors and computing power hardware. However, in a differentiated market, non-mainstream sectors may find it difficult to find systematic opportunities. Operationally, it is recommended to focus on the core sectors of hard technology, look for opportunities to add positions during pullbacks, avoid small and mid-cap stocks lacking fundamentals, and pay attention to the value of safe-haven allocation in the central special assessment sector. With recent high-level reductions in the technology sector, be wary of short-term volatility risks in high-holding stocks and avoid heavy positions. Galaxy Securities: The term has become the anchor point of value in the intelligent era Recommendations to focus on core AI industry benefiting directions According to the research report from Galaxy Securities, the term has become the anchor point of value in the intelligent era, widely used as a settlement unit in the AI industry. From the demand side, the rapid growth in global usage of terms is driving the AI industry from model iteration towards commercialization and implementation, which is expected to fundamentally reconstruct the production factors, industry logic, and business models of the media industry. The term economy empowers the traditional content production industry, with the support of AIGC tools, moving towards infinite supply, and the prosperity of the content industry. It is recommended to focus on core AI industry benefiting directions, with a focus on: internet giants stepping up their comprehensive layout in AI; leading manufacturers of AI video tool products; top companies in segmented areas benefiting from AI applications; and leading manufacturers advancing in technology iterations. Huatai Securities: SpaceX's listing may boost investment sentiment in the commercial aerospace sector According to a research report from Huatai Securities, SpaceX recently released its prospectus and plans to go public in June. The prospectus detailed the current business situation of the company and provided optimistic prospects for future development, with a market space narrative of 28.5 trillion US dollars that may strengthen the market's understanding of the development potential of the aerospace and AI industries. Huatai believes that SpaceX, as a global leading commercial aerospace + AI company, its listing plan may boost investment enthusiasm and confidence in China's aerospace industry, resonating in the capital markets of China and the United States. It is recommended to pay attention to investment opportunities in China's commercial aerospace sector. This article is reprinted from "Tencent Stock Picks", GMTEight editor: Wang Qiujia.