A-shares closing review | The Shanghai Composite Index fell by 0.16%, with the index fluctuating widely. The main themes of rising prices for semiconductor materials and minor metals were active against the trend.

Today, the market fluctuated widely, with all three major indexes collectively closing down, with the Shanghai Composite Index holding up relatively well. The two main themes of rising prices, semiconductor materials and minor metals, were active against the trend, while some AI concept stocks showed a decline. The market saw a total turnover of 2.5 trillion yuan, with over 4,000 stocks in decline in both markets. On the market, the minor metal sector saw a significant increase, with stocks such as Guangdong Xianglu Tungsten and Chongyi Zhangyuan Tungsten hitting the limit up. According to data from Shanghai Ganglian E-Commerce Holdings, as of the end of May, domestic tantalum ingot prices have risen by over 150% year-to-date, germanium ingot prices by over 72%, and molybdenum concentrate prices by over 31%. The semiconductor materials sector continued to rise, with strong performances in sputtering targets, photoresists, and electronic special gases, with Hubei Heyuan Gas Co., Ltd. hitting the limit up for 6 consecutive days. Analysts say that the strong demand in the global semiconductor equipment market, along with the increasing industry prosperity, is expected to lead to synchronous growth in upstream semiconductor material demand, evident in the consumption of electronic special gases, sputtering targets, silicon wafers, photoresists, and precursor metal consumables. Some AI concept stocks showed a decline, including those related to physical AI, AI marketing, and multimodal AI. Among them, the popular stock Shenzhen Das Intellitech hit the limit down, with trading volume exceeding 2.7 million shares; stocks such as Tianyu Digital Technology Group, Nancal Technology, Guangdong Guangzhou Daily Media, and Shanghai Fengyuzhu Culture Technology saw significant declines. Market analysts pointed out that the main reasons for the adjustment of AI concept stocks this time include: 1. External emotional transmission. The weakness of AI concept stocks in the US overnight has had a negative impact on related sectors in the A-share market. 2. Profit-taking pressure. Some stocks had accumulated large gains in the previous period, and companies have been releasing risk warning announcements, triggering profit-taking activities. 3. Disruption caused by reductions in holdings. Some companies have disclosed plans for shareholders to reduce their holdings, causing short-term pressure on the market sentiment. In addition, the news of OpenAI considering significant price cuts has also contributed to the negative sentiment around AI concept stocks. In terms of individual stocks, there were 1370 gainers and 4069 decliners in the two markets, with 88 stocks maintaining their gains. There were a total of 79 stocks hitting the limit up and 55 stocks hitting the limit down. At the close, the Shanghai Composite Index fell by 0.16% to 3987.01 points, with a turnover of 1185.6 billion yuan; the Shenzhen Component Index fell by 0.68% to 14851.98 points, with a turnover of 1366.5 billion yuan. The ChiNext Index fell by 1.13% to 3811.25 points. Capital Trends Today, the main funds focused on the rush to the minor metals, electronic chemicals, and energy metals sectors. The leading stocks with the most net inflow of funds included Fiberhome Telecommunication Technologies, Yunnan Lincang Xinyuan Germanium Industry, and Chongyi Zhangyuan Tungsten. News Review 1. Omdia: Semiconductor market revenue in the first quarter exceeded $300 billion According to Omdia's latest research, semiconductor revenue in the first quarter of 2026 increased by 27% compared to the fourth quarter of 2025, reaching $319 billion. Memory revenue was the major driver of this growth, with an increase of over 80% in the first quarter of 2026. As memory revenue continues to lead the semiconductor market forward, strong growth is expected to continue into the second quarter of 2026. Although the growth rate in the second quarter may slow compared to the first quarter, it is still enough to achieve over 20% sequential growth in the semiconductor market. 2. OpenAI reportedly considering significant token price reduction According to reports, OpenAI is considering a significant reduction in the token fee for its products, in response to similar price reductions expected by major competitor Anthropic to compete for users. 3. Changchun City: In recent years, FAW's production and sales in Changchun have seen a decline, and may face pressure for strategic restructuring of central SOEs in the future The "13th Five-Year Plan for the Development of the Automobile Industry in Changchun City (Draft for Soliciting Opinions)" is open for public comments. It mentions that in the context of market "oversaturation" and increased national supervision of the automobile industry, in recent years, FAW's production and sales in Changchun have seen a decline, and the company may face pressure for strategic restructuring of central SOEs in the future. 4. Oracle CFO: The company's backlog of orders reaches $638 billion, reflecting strong market demand for AI infrastructure and cloud services After the close of the market on Wednesday Eastern Time, Oracle's CFO Hillary Barbara Marksen stated that by the end of the fiscal year on May 31, the company's remaining contractual obligations amounted to $638 billion, up 363% year-on-year, with an estimated 12% to be recognized as revenue within the next 12 months, and another 34% to be recognized within the next 13 to 36 months. Marksen said, "This record figure, supported by long-term customer contracts, fully reflects the strong market demand for artificial intelligence infrastructure and cloud services, giving us very high visibility into future revenue growth." Future Judgment 1. Shenwan Hongyuan Group: The structural upward trend of A-shares is approaching the high zone, the overall upward space is yet to be opened Fu Jingtao, chief analyst of A-share investment strategy at Shenwan Hongyuan Group Research Institute, stated that the structural upward trend of A-shares is approaching the high zone, with the overall upward space yet to be opened, and June to July may be a window for rapid adjustments. In the future, more structural factors will be integrated into the long-term upward trend, extending the duration of the market trend. It is expected that the second half of 2026 will see a new round of upward trends. The ability of performance to digest valuations is crucial, and the prosperity track needs to be validated by high performance growth to support valuations. Sectors that reflect expectations of turning points also require improved performance to validate and support valuations. As time goes on, more directions that can verify cyclical improvements will increase, laying the foundation for a long-term upward trend and a flourishing market. 2. China Securities Co., Ltd.: Industry allocation in June should adopt a "barbell structure" According to a research report from China Securities Co., Ltd., the industry allocation recommendation for June should adopt a "barbell structure": On one end, retain a high-liquidity bottom portfolio for high-liquidity industries such as AI, semiconductors, and export manufacturing, and on the other end, allocate high-dividend, stable cash flow assets to control portfolio volatility, with a flexible position in cyclically rising prices, new energy recovery, and policy order themes. The main themes in the market in May were highly concentrated in communications, electronics, and the AI hardware chain, indicating that funds are still focused on industry prosperity and pricing based on performance realization. However, with the AI chain experiencing significant short-term gains and increasing trading congestion, it is not advisable to continue to increase the overall AI position in June. Internally, the focus should shift from high-growth segments to areas such as semiconductor materials, equipment components, PCB materials, and domestic computational power support that have stagnated in both growth and fundamentals. If the PPI continues to recover and the income-to-inventory ratio improves, the weight of the cyclical price rise chain can be moderately increased, gradually expanding from coal and non-ferrous metals to chemicals, machinery, transportation, etc., provided that price increases can be transmitted to income and gross profit margins. This article is reprinted from "Tencent Stock Sector", GMTEight editor: Liu Jiayin.