[Focus Review] The Shanghai Composite Index surged then fell back, losing the 3900-point mark again, with the commercial aerospace concept remaining active, and the Zhang Xue locomotive concept breaking out against the trend.

Caixin News, March 31 — Today, 53 stocks hit the daily limit, 17 stocks were halted from hitting the limit, with a board rate of 76%. Shenjian Co. achieved four consecutive limit-ups, JinYao Pharmaceutical three, XinNeng TaiShan five out of six days, ShuHua Sports five out of eight days, WanBangDe four out of six days, DaDongNan three out of four days, China Iron & Steel five out of five days. The market surged then pulled back throughout the day, with the ChiNext Index and STAR Market 50 Index both falling over 2.5%. The combined trading volume of the Shanghai and Shenzhen markets reached 1.99 trillion yuan, an increase of 76.8 billion yuan from the previous trading day. On the sector front, market hotspots rotated weakly, with over 4,300 stocks declining. Leading sectors included sports, high-speed rail and subway, automobiles, and banking; lagging sectors included agriculture, wind power equipment, lithium batteries, and semiconductors. By the close, the Shanghai Composite fell 0.8%, the Shenzhen Component Index dropped 1.81%, and the ChiNext Index declined 2.70%.

Analysis of Popular and Limit-up Stocks

The upgrade rate of limit-up stocks dropped to 16.67%, with only 2 stocks maintaining three or more consecutive limit-ups, and among the 10 stocks with two consecutive limit-ups yesterday, only 1 achieved an upgrade. Following the previous five-limit-up high-standard Meinuo Hua’s break and sharp decline, the limit-up height has dropped to four consecutive limit-ups for Shenjian Co. As market expectations of tensions in the Middle East continue to be digested, the previously leading new energy sectors such as lithium batteries and energy storage, as well as chemical and coal sectors driven by tight energy supplies, showed a synchronized retreat today. Many stocks like Jinniu Chemical approached the limit down, with Haibo Sichuang and EVE Energy among the top decliners. The current market uncertainty regarding the annual and first-quarter reports of listed companies remains the main reason for the gradual disintegration of trend-following strategies. Some previously high-growth, stagnating sectors with strong performance expectations still present active opportunities.

Main Trend Hotspots

On March 30 at 19:00, the LiJian No. 2 remote launch vehicle successfully completed its maiden flight in the Dongfeng Commercial Aerospace Innovation Test Zone, sending the XinZheng 01 and 02 stars and TianShi Satellite 01 into orbit. The commercial aerospace concept was further boosted, with Shenjian Co., a limit-up stock, achieving four consecutive limit-ups, driving ShunHao Co., JuLi SuoGu, and TongDa Co. to hit the limit, while ZhunSheng Technology and XiCe Testing reached new historical highs. According to a set of cost data disclosed by ZhongKe YuHang, this rocket with a takeoff weight of 625 tons has a unit cost in non-recovery mode approaching the level of SpaceX’s Falcon 9 recovery costs. As SpaceX prepares to launch its IPO, igniting sector enthusiasm, a series of domestic catalysts are also highly anticipated. Since last year, multiple commercial aerospace companies such as Blue Arrow Aerospace, Galaxy Aerospace, YiXin Aerospace, ZhongKe YuHang, WeiNaXingKong, TianBing Technology, and XingHe Power have submitted guidance filing materials, preparing to list on the capital markets. However, unlike previous catalysts like the calculation and energy cooperation, the overall performance of branches like space computing power and space photovoltaic remains relatively calm, making it difficult to replicate the strength of the green energy industry chain.

CCTV Finance reports that one of the major projects in the 14th Five-Year Plan, the Shanghai-Chongqing-Rong along the Yangtze River High-Speed Rail, is accelerating — with a total investment of over 500 billion yuan, planned length of about 2,000 kilometers, extending from Shanghai to Chengdu, connecting the Yangtze River Delta, the middle Yangtze River, and the Chengdu-Chongqing urban clusters. The high-speed rail industry chain, which showed some activity in the afternoon yesterday, reactivated as China Railway High-speed opened with a two-limit-up, driving JinYing Heavy Industry, China Railway Industry, and JinXi Axle to hit the limit, with JiaoDa Iron and TONGYE Technology both rising over 10%. Looking back at the entire infrastructure sector, the last major rally was triggered by the super hydropower concept in July last year. Most stocks in this sector experienced over half a year of adjustment after peaking, and under news-driven stimuli, a pulse-like rebound from deeply oversold low positions is understandable. Similarly, the recent activity in Fujian’s sector also resonates with its oversold properties and some sudden news stimuli, attracting short-term speculative funds amid overall weak market sentiment.

According to reports, at the World Superbike Championship (WSBK) Portugal round ending March 29, Chinese motorcycle manufacturer “Zhang Xue Motor” won consecutive championships in the two-leg WorldSSP races. The motorcycle concept stocks surged against the trend in the afternoon, with HongChang Technology hitting two consecutive limit-ups of 20 cents, driving ZhengHe Industrial, QianJiang Motor, and FuAo Co. to hit the limit, while HongQuan Technology, HuaYang Racing, and JiuQi Co. also ranked among the top gainers. As Zhang Xue Motor’s popularity rises, the surge in orders for related popular models is expected to further boost high prosperity in related component segments. In fact, recent enthusiasm for sports concepts has been rising steadily. Besides the near-peak performance of ShuHua Sports, which is also linked to Fujian’s sector, other companies like ZhongTi Industry, JinLing Sports, and GongChuang Turf have also performed well, possibly related to upcoming local football matches such as “Su Super” and “Yue Super,” as well as the upcoming World Cup in June. Today, Zhang Xue Motor’s concept quickly fermented, driving batch rebounds in motorcycles and auto parts, but whether this can further strengthen in the short term depends on whether high-visibility limit-up stocks emerge.

Recently, many leading companies in the innovative drug industry have performed well, with high popularity for the concept. Yesterday, two CXO concept stocks, Kelai Ying and ZhaoYan New Drug, both hit the limit-up driven by their better-than-expected earnings. However, the previous five-limit-up Meinuo Hua experienced intra-day volatility and divergence, which still impacted high-position stocks within the sector. Yesterday’s record highs for Sansheng Guojian and RongChang Biological also saw adjustments today. It shows that the current activity in the innovative drug sector is mainly driven by the recovery of previously deeply adjusted high-potential stocks. From the industry’s growth trajectory, profitability realization still faces many uncertainties, such as rising R&D costs and clinical and commercialization progress. As a long-term growth industry, external factors like tightening global liquidity could continue to disturb the sector’s trend.

Future Outlook

After a brief stabilization earlier, the market today fell back into a broad decline with increased volume. The Shanghai Composite surged then retreated, once again falling below 3,900 points. The ChiNext Index, which had previously been resilient, closed with a long lower shadow, breaking the half-year moving average. Regarding individual stocks, over 4,300 stocks declined today; although only one non-ST stock hit the limit down, the batch decline of major growth sector leaders may further impact the ChiNext and Growth Enterprise Market indices. Summarizing March’s performance, the CSI 50 and STAR Market 50 indices both fell over 15%, and the micro-cap index dropped over 8%, reflecting a significant increase in losses among small and micro-cap stocks. The sustainability of the resilience of large-cap growth stocks remains uncertain. With a large number of companies releasing annual and first-quarter reports in April, it is advisable to avoid some high-valued thematic small stocks still at high or historical levels.

Today’s Limit-up Analysis Chart