Hexun Information Yang Deyong: The surge to a new high, is it a trap to lure more buyers?

Today, all major indices in the A-share market are once again broadly turning red, with the gains further expanding, and trading volume continuing to increase. Is this current upward trend actually a trap for late buyers?

According to Yang Deyong from Hexun Information, first of all, this is definitely not a trap for late buyers, because looking at the industries that are rising today, we can see that it is still the semiconductor and chip industries that are genuinely gaining. Further examining the related industries, such as the CPU supply chain—for example, Cambrian and ZTE did not rise today, and the GPU line didn’t react much. In this situation, the rise in the CPU-related supply chain is driven by overseas Intel’s significant surge, which is due to increased demand for CPU chips. But is this rise a trap for late buyers? We need to analyze it this way: at the end of April, we saw that the domestic chip industry was generally rising, driven by performance—this was the trend in the second half of April. But now, the situation is different; the current rise is driven by event-driven factors in related industries. This raises a question: during the intensive period of performance disclosures, institutional capital relies on performance as a basis for valuation and pricing. But now, only events are visible, without corresponding operational data or performance basis. Under these circumstances, the difference from when there is performance is that valuation and pricing are based on actual performance, which is reasonable. However, purely event-driven scenarios—such as Intel raising CPU prices and expecting future performance growth—pose a problem. There are still months before the second quarter earnings are disclosed, and during this period, performance and operational data cannot verify whether rapid growth will occur. This can lead to a prolonged period where, if the event does not continue, stock prices may fluctuate within a range.

Further analyzing the domestic situation, it’s quite clear. Among the genuinely rising chip stocks today, there are only two: Lankuo and Haiguang, both related to CPUs. Other stocks like Cambrian have not risen much. From this perspective, it also confirms that the current situation is not a trap for late buyers, but the participation of event-driven capital is quite high, which creates the appearance of sustained activity. If the event does not continue, the stock prices are likely to oscillate around this level. Therefore, at this stage, we shouldn’t be overly optimistic just because a few hot stocks are rising. A closer look shows that most related stocks in the chip industry have not experienced cumulative gains—except for Lianqi Technology. Stocks like Haiguang, for example, have not hit new highs and are still at this level. So, we are optimistic about the future of the chip industry, but before the latest earnings are announced and properly priced, all price fluctuations driven solely by events—if such events are not happening daily—are unlikely to sustain continuous growth. Therefore, it’s reasonable to be optimistic about the future industry development, but expecting another short-term surge may have limited sustainability. It’s not that we are pessimistic, but we should be cautious about overly optimistic short-term expectations.

Regarding this kind of situation, we still adhere to our previous view: in the current phase without earnings disclosures, the major stocks are likely to continue oscillating—mainly the leading technology stocks. For small-cap stocks, the response should be more frequent before the next earnings season, but during this period, investors should also be aware of some temporary temptations. Recently, many investors seem to be interested in investing in chips and storage, right? It’s not that the industry is not promising, but can you withstand the fluctuations before earnings-driven growth kicks in? If you can endure the industry’s optimism, that’s fine; but if you can’t, it’s better to proceed cautiously.

(Edited by: Shao Xiaohui)

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