A-share Midday Review | Shanghai Composite Index falls 0.71%, computing power hardware plunges, CSSC-related battery stocks buck the trend and strengthen

On November 3, the three major A-share indices opened collectively lower and accelerated their decline in early trading, with the ChiNext Index once falling more than 2%. The Shenzhen market then fluctuated and recovered, with the ChiNext Index briefly turning positive before falling again before midday. The market showed a divergent pattern of "tech heavyweights dragging the index, more stocks rising than falling, and capital switching to lower-level directions." As of the midday close, the Shanghai Composite Index fell 0.71% to 3,612.09 points, the Shenzhen Component Index fell 0.16% to 10,993.07 points, the ChiNext Index fell 0.94% to 2,435.60 points, and the STAR 50 fell 2.54%. More than 3,300 A-share stocks in the Shanghai and Shenzhen markets rose, while more than 2,100 fell. Half-day turnover across the Shanghai, Shenzhen, and Beijing markets was about RMB1 trillion, a decrease of about RMB152 billion from the previous trading day. On the capital flow side, in morning trading, main funds recorded net inflows into sectors including power equipment and new energy, nonferrous metals, and electrical equipment, while recording net outflows from electronics, semiconductors, and communications, among which the electronics sector saw net outflows exceeding RMB4.3 billion; among individual stocks, Contemporary Amperex Technology topped net buying with more than RMB1.1 billion, while Zhongji Innolight saw net selling exceeding RMB700 million. Market Overview On the board, on the gainers' side, the CSSC-related concept surged in late morning trading, the battery industry chain strengthened collectively, the film and cinema and gaming sectors remained active, and lower-level directions such as fisheries, pork, and precious metals also showed gains; on the decliners' side, communications equipment, components, and semiconductors led the declines, while optical communications, CPO, and electronic chemicals weakened in tandem, and banking and petroleum & petrochemicals also fell, with the weakness in petroleum & petrochemicals directly related to overnight WTI crude settling down 7.55% at US$96.26/barrel. Overall, semiconductors and optical communications account for a relatively high weight in the ChiNext Index and STAR 50, so the adjustment in computing power hardware directly dragged on the indices, but most small- and mid-cap stocks rose, and capital did not withdraw across the board but instead rebalanced from high-level computing power hardware toward batteries, livestock, media, and other directions. Hot Sectors 1. CSSC-related concept surges in late morning trading The CSSC-related concept surged in late morning trading, with KSEC Intelligent Technology hitting the 20% limit up, Hubei Jiuzhiyang Infrared System rising more than 8%, China Shipbuilding Industry Group Power rising more than 3%, China CSSC rising more than 2%, and HG Technologies and China Shipbuilding Emergency following higher. Comment: On the news front, the 16th China International Aviation and Aerospace Exhibition will be held in Zhuhai from December 7 to 13. This edition will set up a Gaolan Port maritime equipment exhibition area for the first time, and China State Shipbuilding Corporation plans to exhibit more than 150 items, including a new 500-tonne-class unmanned vessel and other surface and land equipment, which is near-term background rather than a new catalyst for the day. No new same-day catalyst was seen at the sector level; at the individual stock level, KSEC Intelligent Technology opened flat, fell nearly 4% intraday, and then directly sealed the 20% limit up before midday, while Hubei Jiuzhiyang Infrared System rose more than 15% intraday before pulling back to around 8%, looking more like short-term rotation by low-level funds. 2. Battery industry chain sees wave of limit-ups The battery industry chain strengthened collectively, with Tianjin Guoan Mengguli New Materials Science & Technology hitting the 20% limit up, Shandong Fengyuan Chemical, Jiangsu Lopal Tech. Group, Shandong Sacred Sun Power Sources, and Shangshui Smartech hitting the limit up, Shanghai Zizhu High-Tech Science And Technology posting a second consecutive limit-up, and Contemporary Amperex Technology rising more than 4%. Comment: On the news front, Contemporary Amperex Technology disclosed buyback progress on the evening of November 2. As of October 31, it had cumulatively repurchased about 19.6059 million A-shares, accounting for 0.4447% of the company's total A-share capital, with total transaction value of about RMB5.36 billion; at the industry level, XPeng's IRON humanoid Siasun Robot&Automation dedicated solid-state battery has achieved small-batch mass production and rolled off the line, and Contemporary Amperex Technology said on an investor interaction platform that the company's all-solid-state battery is expected to achieve small-batch production in 2027. At the policy level, the "15th Five-Year Plan for the Development of the New Battery Industry" proposes that all-solid-state batteries initially achieve large-scale application by 2030. On the capital flow side, the battery sector ranked first among industries in half-day main-fund net inflows. 3. Film and cinema sector remains active The film and cinema sector remained active, with Zhejiang Huazhi Digital Media hitting the 20% limit up for a second consecutive limit-up, Alpha Group hitting the limit up, Cultural Investment Holdings hitting the limit up, Dasheng Times Cultural Investment and Hangzhou Electronic Soul Network Technology opening limit-up and both recording second consecutive limit-ups, Ciwen Media Co.,Ltd. rising more than 7%, and Shanghai Film rising more than 4%. Comment: On the news front, CCTV Finance reported on October 31 that about 10 Chinese companies have established overseas short-drama platforms, more than 10 overseas short-drama apps have launched dedicated AI comic-drama channels, overseas AI comic-drama active users overall have exceeded 150 million, and Chinese companies occupy nine of the top ten overseas short-drama paid applications. That news was the original catalyst for the sector's launch on November 2, and today is the continuation and further fermentation on the second trading day. 4. Semiconductors and computing power hardware fall collectively The semiconductor sector opened lower and moved lower, with Hangzhou SDIC Microelectronics Inc. limit-down at the open, Zhongji Innolight and Yuanjie Semiconductor Technology falling more than 8%, Suzhou TFC Optical Communication falling 8%, Cambricon falling more than 7%, Eoptolink Technology Inc., falling more than 4%, and JHT Design Co.,Ltd. falling more than 8%. Comment: On the news front, overnight U.S. chip stocks weakened collectively, with the Philadelphia Semiconductor Index falling more than 3%, Intel falling more than 8%, and AMD falling more than 7%; Marvell Technology announced an all-stock acquisition of optical component maker Lumentum, with the transaction implying an enterprise value of about US$115 billion, and after the announcement Marvell Technology fell 12.7% and Lumentum closed down 18.6%, weighing on the optical communications sector. In addition, Hangzhou SDIC Microelectronics Inc. was placed under investigation by the CSRC on suspicion of information disclosure violations, with the company and controlling shareholder Lu Hanquan both placed under investigation and some securities accounts and bank accounts frozen, and the stock was limit-down at the open today.