A-shares experience a V-shaped rebound, with over 4,500 stocks rising. Many military industry concept stocks hit the daily limit, computing power chips explode in growth, and Mu Xi Co., Ltd. soars 16%.

By Reporter | Jin Shan, Yi Yanjun, Li Wen

Edited by | Jiang Peixia

On March 24, after the three major A-share indexes opened higher, they briefly turned lower across the board, then bottomed out and rebounded. As of the midday close, the Shanghai Composite Index rose 0.95%, the Shenzhen Component rose 0.26%, the ChiNext Index fell 0.79%, and the STAR Market Composite Index rose 1.72%. In the first half of the session, the total trading value on both Shanghai and Shenzhen markets was 1.32 trillion yuan. More than 4,500 stocks across the market advanced.

Source of image: 21st Century Business Herald app

In terms of specific sectors, the green electricity concept continued to strengthen. Huadian Liaoning notched a seventh consecutive daily limit-up. Shao neng Co., Ltd. hit a 4-out-of-5-day limit-up. Liaoning Energy notched two consecutive limit-ups. Disen Co., Ltd. hit a 20CM limit-up. The military-industrial sector also strengthened, with Great Wall Military Industry, Hunan Tianyan, and Construction Industry all hitting limit-ups.

The computing power chip concept saw a sharp rebound. Muyi Co., Ltd. rose more than 16%, Moore Threads rose more than 9%, Xinyuan Co., Ltd. rose more than 7%, and Cambricon rose more than 6% to return to the 1,000-yuan stock price range.

The big financial sector saw some localized movement. Non-bank financials led the gainers. Harbin Bank touched a limit-up intraday, while Bohai Leasing, Southwest Securities, Guosen Securities, and others also followed higher. On the news front, among listed brokerages that have already released earnings previews, more than half are expected to see a year-on-year increase of over 50% in net profit attributable to shareholders; industry profitability is entering a full-scale recovery.

The weight-loss drug concept surged quickly intraday. Mineyou Pharmaceutical hit a 2-of-3-day limit-up. Jinkai Biology rose more than 8%. Baihua Biotech, Haoyuan Pharma, Kelaiying, Xincell Biotech, and others followed higher. On the news front, Novo Nordisk’s semaglutide core compound patent in China has expired. This means that the single product—dubbed the “world’s best-selling drug”—will break the long-standing monopoly landscape. See more >>

On the downside, the memory chip concept fluctuated and then fell back. Purun Co., Ltd. fell more than 9%.

In Hong Kong stocks, the Hang Seng Index rose more than 1.5%, and the Hang Seng Tech Index turned positive and rose more than 1.2%. Earlier, it briefly plunged by more than 0.3% intraday. Large internet and tech stocks also rose in tandem. Zhipu rose more than 5%, Lenovo Group and Hualiang Semiconductor rose more than 3%, BYD and NIO rose more than 2%, and Meituan, Tencent Holdings, SMIC, Kuaishou, Xiaomi Group, Alibaba, and others all rose more than 1%.

Institutional view: Build positions around “certainty”

With the current market shrouded in uncertainty, A-share industry allocation may come down to three key words: advantage (advanced) manufacturing, a price-increase thesis, and low-volatility dividend opportunities.

Qu Xiang, chief A-share strategist at Citic Securities, suggested firmly building around the pricing power of China’s advantage manufacturing. “At present, the recommended core holdings are still in industries where China has a share advantage, overseas capacity reset costs are high and difficult, and supply elasticity is easily influenced by policy—based on new energy, chemicals, power equipment, and non-ferrous metals. The recent liquidity shock has pushed many valuations back into relatively ‘cheap’ zones. Extreme negative narratives and storytelling are somewhat similar to the overseas-bound products after April 7 last year, which once again brought huge gaps in expectations and low valuations. On top of these core holdings, it is recommended to further increase exposure to low-valuation factors, focusing on insurance, brokerages, and power.”

Qianhai Open-Source Fund believes two directions may be worth watching next: first, products that benefit from energy price increases, such as coal, power, chemicals, and agriculture; second, sectors with independent industry growth logic, such as advanced manufacturing (new energy, machinery and equipment, and military industry).

Officials from China-Europe Fund mentioned that global inflation and the increasingly tense geopolitical situation will further drive the performance of cyclical commodities. Against the backdrop of rising volatility, the allocation value of low-volatility assets is gradually returning. You can look from three angles: first, traditional low-volatility dividend opportunities; second, coal-to-chemicals and related segments in the chemical chain, where profit margins are expected to improve beyond expectations; and last, the oil and gas sector, which benefits from a long-term upward shift in the product price center of gravity.

In addition, Ping An Fund cited three leads: first, technology growth sectors that benefit from policy support and industrial upgrading, including computing power infrastructure, semiconductors, and high-end manufacturing—within the logic of global industrial-chain restructuring and being independently controllable, these have medium- to long-term growth space;

Second, high-dividend assets with stable cash flows and dividend capability. In an environment of fluctuations around the interest-rate center and increasing market uncertainty, defensive attributes and allocation value continue to stand out;

Third, upstream energy and bulk commodities sectors that benefit from an upward shift in the commodity price center of gravity. In an inflationary environment, they have a certain hedging attribute, and their earnings upside is relatively clear.

Ping An Fund believes that, overall, in the short term the market may still maintain a high-volatility pattern, but the medium- to long-term logic has not been broken. Structural opportunities are still worth actively capturing. See more >>

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