Focus recap: The ChiNext Index experienced a four-day consecutive decline with reduced volume, and the combined market turnover dropped below 1.7 trillion, hitting the lowest level of the year. Funds continue to favor the optical communication sector.

Source: Caixin Global

Caixin Global, April 3—Today, 36 stocks hit their daily trading limit, 12 had orders fail (board “breakout”), and the board-locking rate was 75%. Tianjin Pharmaceutical hit a 6th consecutive limit-up. Xinengtai Shan gained 7 limit-ups in 9 days. Huiyuan Communications and Chongqing Huyao Holding each logged a 2nd consecutive limit-up. Su Li Shares had 3 limit-ups in 6 days. The market saw choppy trading throughout the day. The three major indexes opened higher and then declined; the Shanghai Composite Index once again fell below the 3,900-point threshold. Large- and small-cap indexes diverged significantly, with the micro-cap index falling more than 3.5%. Total trading value on the Shanghai and Shenzhen exchanges was RMB 1.66 trillion, down RMB 186.5 billion versus the previous trading day (a contraction). On the trading board, market themes were relatively mixed: CPO, cross-border payments, and lithography machine sectors led by gains; sports, coal, agriculture, and chemical sectors led by declines. By the close, the Shanghai Composite fell 1%, the Shenzhen Component fell 0.99%, and the ChiNext Price Index fell 0.73%.

Analysis of popularity and consecutive-limit-up stocks

The rate of stocks advancing from consecutive limit-ups fell to 16.66%. Among yesterday’s consecutive limit-up stocks, only the top performer—Jin Yao Pharmaceutical—managed to advance. Among yesterday’s first-limit-up stocks, only 2 succeeded in advancing. The “money-losing” effect in high-position stocks was released again. Overnight, international oil prices surged by more than 10%, but sectors that benefited from high oil prices—oil and gas, chemicals, coal, etc.—instead saw broad pullback action. In the coal-to-chemicals sector, popular stocks from the earlier period such as Jinmei Technology, Yunyuan Energy, and Xinghua Co., Ltd. all hit limit-down. Meanwhile, the earlier 3-consecutive-limit-up stock Xin Zhonggang nearly staged a “limit-up and limit-down” intraday, which continued to put sustained pressure on the green power concept that had already started to weaken; Shenan Electric A, Min Dong Power, and Leshan Electric all sealed their limit-downs. U.S. tech stocks rallied overnight, but funds in the compute-power direction further concentrated toward optical communications. The continued increase in the number of individual stocks hitting limit-down indicates the current market remains in an extremely risk-off, bearish posture; the money-losing effect on underperforming small-cap stocks is still being released continuously.

Main line themes

Yesterday, the Ministry of Industry and Information Technology issued a notice proposing to promote deployments of technologies such as all-optical switching, reduce network latency from compute-power application terminals to servers, and improve the interactive experience of applications. The OCS concept got a boost from this news; throughout the day it led strongly among compute-power hardware stocks. Deckorui, Tengjing Technology, FiberHome Optical, Zhili Fang, and Changguang Huaxin refreshed record highs. Trend-grouped small-cap stocks such as Weiteng Electric, Yitian Shares, and Huachang Commerce also reversed and hit limit-up to accelerate. Based on research reports from multiple brokerages, some overseas large manufacturers have been receiving OCS orders; these mainly cover clients such as Google and Meta. And the latest policy from the Ministry of Industry and Information Technology positions OCS all-optical switching technology as a bottom-layer “standard” for compute-power networks, creating a logic of resonance between domestic and overseas demand in this niche. As for the optical fiber industry chain—another hot direction on the hardware side—it still shows the “central players” repeatedly hitting new highs, bringing about a sound trend in which low-position small-cap stocks keep emerging. However, the performance next week of major heavyweights such as Longfei and Hengtong remains key; if a scenario of consecutive high-level trading with volume but stagnating gains appears, investors’ realization pressure on some pure “follow-the-trend” theme small caps should still be treated with caution.

Yesterday, the Ministry of Industry and Information Technology also published a document proposing to explore innovative businesses such as “compute-power banks” and “compute-power supermarkets,” supporting small and medium-sized enterprises in storing idle compute-power resources. The compute-power leasing concept turned actively active against the trend in the daytime. The compute-power scheduling concepts—Shiqi Technology and Zhenzheng Technology—both hit limit-up. Junyi Digital and Orient International (rights protection) both jumped more than 10% intraday. And as Step 3.5 Flash new version was recently released by Step-up Star and as the completion of share reform news provided a stimulus, related concept stocks such as Yunse Zhilian went straight to limit-up in the afternoon. Zhongbei Communications, Feile Audio, and Xinhua Media also briefly surged. But the recent performance of price-rising concepts such as Tencent Cloud—previously a leader in the compute-power leasing industry chain—has been relatively soft in recent times. Some popular names such as Hongjing Technology and Oryard also show signs of weakening. Therefore, the current activity in the compute-power leasing concept still largely relies on some funds trying to go long on a batch of low-position stocks within the sector, and its sustainability is still hard to describe as optimistic.

SEMICON China 2026 exhibition shows that under AI compute-power driven momentum, the global semiconductor industry is entering a new growth cycle, with advanced packaging and memory among the focus areas. The semiconductor industry chain was active against the trend throughout the day. Benefiting from a surge in helium prices driven by the situation in the Middle East, China Shipbuilding Special Gas sealed a 20-centimeter limit-up. Walt Gas closed up nearly 10%. Meanwhile, the strong performance at the equipment end—which has been showing solid results recently—remains resilient. In addition, the concept of mergers and acquisitions: Jiuzhou Yiqi sealed a 20-centimeter limit-up as well. Jintuo Shares (rights protection), Blue Ying Equipment, Delong Laser, and Huaxing Yuanchuang all ranked among the top gainers. In addition, domestic compute-power chip stocks such as Moore Threads, Muxi Shares, and Cambricon also remained active against the trend. As major global chip giants’ earnings came in above expectations and as domestic compute-power chip companies completed IPO financing, they have provided ample “ammunition” for the semiconductor industry chain’s expansion wave. Upstream sub-segments such as equipment and materials still remain the deeply benefiting areas. However, the current走势 of overseas tech stocks still shows a high degree of uncertainty, and constraints on the domestic semiconductor industry chain’s performance cannot be ignored.

On April 2, U.S. Eastern Time, the White House formally announced that it would impose a 100% tariff on imported patented drugs and pharmaceutical ingredients. The purpose of this move is to use tariff pressure to force pharmaceutical companies to bring production back to the U.S. or accept pricing agreements. Under the disruption of the above news, the previously continuously active performance in the pharmaceutical industry chain differentiated. The top performer—Jin Yao Pharmaceutical—advanced to a 6th consecutive limit-up. Chongqing Huyao Holding advanced to a 2nd consecutive limit-up. Lai Mei Pharmaceutical and China National Pharmaceutical both hit limit-up, but Lianhuan Pharmaceutical, Zhongyuan Xiehe, and Run Du Shares closed at limit-down. From the scope of this round of tariff increases, patented drugs—one of the main tariff targets—are not the primary products exported to the U.S. by China’s pharmaceutical companies, and the impact on potential BD (business development) transactions is also more limited. Instead, CXO companies with a globalized capacity layout and innovative drug companies whose main overseas strategy is BD transactions are more likely to benefit from this wave of global supply-chain restructuring.

Outlook for the next stage

Against the backdrop of highly uncertain developments in the Middle East situation, market risk-aversion sentiment has risen sharply, causing today’s trading to fall into a contraction in volume combined with broad pullbacks across the market. More than 4,700 stocks fell. And because Shanghai-Shenzhen-Hong Kong Stock Connect was closed for the day, total trading value across the two markets fell below RMB 1.7 trillion, setting an intra-year volume level. Since last year’s Qingming holiday was followed by a severe single-day drop of more than 7%, it is understandable that risk-aversion sentiment in the market is strong today. With roughly equal numbers of daily limit-ups and limit-downs among individual stocks today, and considering that among yesterday’s consecutive limit-up stocks only 1 advanced (showing limited signs), after market short-term sentiment hit a low point, the probability of a rebound next week is fairly high. However, active funds have continued to shrink their scope and focus on relatively more certain performance-growth directions such as compute-power hardware, though they may still be easily affected by volatility in overseas stock markets. From the index perspective, today’s lagging micro-cap stocks fell again below the half-year moving average after a large-volume mid-level bearish move. The ChiNext Index has recently continued to weaken in tandem, indicating that the “money-losing effect” in small and micro-cap stocks has been spreading into some higher-position, heavy-weight stocks within the growth track. For these types of stocks, short-term performance still highly depends on their annual reports and first-quarter results.

Today’s limit-up analysis chart

(Caixin Global, Jin Haoming)