A-share mid-day review | A-shares rallied on high volume, with the Shanghai Composite Index opening high and returning to the 4000-point level! The "bull market leader" surged in an abnormal manner.

On June 12th, the three major indexes of A-shares collectively opened higher, with the Shanghai index opening higher and continuing to rise, while the ChiNext index opened higher but fluctuated before falling back. By the close, the Shanghai index was up 1.56%, the Shenzhen Component Index was up 1.69%, and the ChiNext Index was up 1.27%. The trading volume of the Shanghai and Shenzhen markets reached 2.06 trillion yuan by midday, an increase of 465.6 billion yuan from the previous trading day. In terms of stock performance, the non-ferrous metal sector surged, with over ten constituent stocks hitting their daily limit. Jinduicheng Molybdenum, Luoyang Shenglong Mining Group continued their consecutive limit up moves, while Tongling Nonferrous Metals Group, CMOC Group Limited, North Copper, and Zhaojin International Gold also hit their limits. The large financial sector saw a strong rise, with the securities sector continuing to increase. BOC International hit the limit up, with GF SEC, Orient, ChinaLin, Guolian Minsheng, and Northeast following the trend. The PCB concept saw repeated strength, with Pamica Technology Corporation and Ganzhou Yihao New Materials hitting their limits. Of note, the rising price themes were once again strong, with the non-ferrous metal sector leading the way. According to Economic News, as AI develops and becomes integrated into the physical world (chips, AI infrastructure, energy and power), non-ferrous metals have become indispensable key raw materials. Copper is needed for electricity, tin solder is essential for chip packaging, tungsten is used for chip wires, and germanium is necessary for photovoltaic conversion. With the prices of minor metals rising this year, the core logic points to a dual resonance of supply constraints and expanding new demand. Shenwan Hongyuan Group Securities analysis states that amidst the fluctuations in the Middle East geopolitics, the rising expectations of a Federal Reserve rate hike have put pressure on bulk metals. However, benefiting from the rapid development of the AI industry, the metal used for computing power is facing a shortage, indicating a promising outlook. Under the long-term drivers of deglobalization and the significant growth of AI, the long-term drivers of precious and basic metals remain unchanged, with the rate hike expectations providing a long-term allocation window, and the prosperity of strategic and computing power metals continuing to rise. Looking ahead, in the short term, the market may stabilize and warm up, showing signs of three resonating scenarios including increased volume in indexes, no consecutive negative feedback in the tech and innovation direction, and a rebound in external stock markets. None of these scenarios have materialized yet, so it is recommended to focus on observing and controlling positions in the near term, awaiting strong market signals before actively participating. In the medium term, the high prosperity trend of the AI industry remains, and with overseas tech giants reporting their mid-year results between mid-July and late August, the pricing logic for AI tech will once again be driven by fundamentals and performance. Hot Sectors: 1. The securities sector continues to rise The large financial sector saw a surge, with the securities sector continuing to rise. BOC International hit the limit up, with GF SEC, Orient, ChinaLin, Guolian Minsheng, and Northeast following the trend. Analysis: Central China believes that the valuation of the securities sector remains low, and the sector is waiting for fundamental and policy dynamics to resonate to further strengthen. 2. The non-ferrous sector continues to rise The non-ferrous metal sector surged with over ten constituent stocks hitting their daily limit. Jinduicheng Molybdenum, Luoyang Shenglong Mining Group continued their consecutive limit up moves, while Tongling Nonferrous Metals Group, CMOC Group Limited, North Copper, and Zhaojin International Gold also hit their limits. Analysis: Industry insiders believe that the rapid development of the AI industry is driving the construction of computing centers, optical cables, electricity grids, and other infrastructure, leading to a large-scale construction boom. Copper, aluminum, rare metals, and other non-ferrous metals play a crucial role as core upstream raw materials, experiencing sustained demand growth as they transition from traditional cyclical goods to essential industrial components in the era of AI infrastructure. 3. The PCB concept shows repeated strength The PCB concept showed repeated strength, with Pamica Technology Corporation and Ganzhou Yihao New Materials hitting their limits. Analysis: Under the explosive growth in AI computing power demand, the PCB (Printed Circuit Board) industry is witnessing a wave of expansion. As of June 11th, incomplete statistics show that 13 PCB manufacturing enterprises have announced expansions this year, with investments exceeding 60 billion yuan (including intentions). Institutional Views: Caixin Securities: The high prosperity trend of the AI industry continues, pricing logic will return to fundamentals and performance Recently, under the backdrop of tightening monetary policies by the Federal Reserve, fluctuating geopolitical events, the "World Cup effect," and the flurry of tech giants' IPOs, global equity markets have generally come under pressure, and A-shares have not been able to break out independently. Overall, there have been no events to boost market confidence effectively, and funds have remained cautious, resulting in A-shares continuing to consolidate at lower levels. In the short term, for the market to stabilize and warm up, a triple resonance scenario is needed, including index volume increasing significantly, no consecutive negative feedback in the tech and innovation direction, and a rebound in external stock markets. Currently, none of these scenarios have materialized, so it is advised to focus on observing and controlling positions in the short term and to wait for strong market signals before actively participating. In the medium term, the high prosperity trend of the AI industry continues, and as overseas tech giants report their mid-year results between mid-July and late August, the pricing logic for AI tech will rely on fundamentals and performance. TF Securities: The medium-term liquidity risk in the market persists, with a clearer market outlook expected around late June The main theme of yesterday's market movement revolved around the rising price logic, with the market showing localized positive performance. However, overall trading sentiment has gradually weakened as trading volume continues to shrink, reflected in individual stocks at high levels experiencing profit-taking and weak hands exiting. There is a need to be cautious of a mass sell-off of stocks that have seen significant gains in the past affecting market sentiment and potentially leading to further index breaks. After-hours, the U.S. PPI data was released, hitting a near three-year high. Coupled with evolving geopolitical events, the closure of the Strait of Hormuz may raise inflation expectations again, suggesting that the medium-term liquidity risk in the market persists. With the Federal Reserve's June interest rate meeting this month, the World Cup effect, and the mid-year end approaching, a clearer market outlook may be expected around late June, hence investors should moderately lower their market expectations beforehand. In terms of strategy, following the late rebound in U.S. stocks, attention should be paid to the overseas market's impact on A-shares, with a focus on controlling positions, reducing positions in stocks breaking high levels, taking profits appropriately, defensive sectors especially related ETFs showing resilience, and considering certain relevant investment opportunities. Structural opportunities exist in the market, but overall trading difficulty remains high, so taking a break may be appropriate. EB Securities: Market sentiment remains cautious, short-term likely to see weak oscillations with lower trading volume Given that the expectations for tightening overseas liquidity have not been reversed, and with geopolitical uncertainty persisting, market sentiment remains cautious, and in the short term, weak oscillations with lower trading volume are likely. Repair opportunities should be considered after market sentiment improves and trading volume significantly increases. In terms of direction, as market risk aversion increases, undervalued and defensive sectors such as oil and gas extraction, minor metals, and rare earth permanent magnets with good performance should be considered. Additionally, the sharp rise in industrial gas prices and further restrictions on semiconductor equipment imports have seen the semiconductor chip industry chain perform against the trend. However, the core contradiction in the current market remains the changing liquidity expectations alongside recurring external disturbances, leading to overall low risk appetite and limited sustainability in various themes. This article was reprinted from Tencent Stock Picks, edited by Wang Qiujia.