A-shares Market Close: Shanghai Composite Index drops 0.74%, narrowly holding above 3,900 points; Oil & Gas and Healthcare sectors perform countertrend gains

April 2, China’s A-share three major indexes all fell today. The Shanghai Composite Index fell 0.74%, the Shenzhen Component Index fell 1.6%, and the ChiNext Index fell 2.31%. Total turnover across the market was 1.86 trillion yuan, down 167 billion yuan from the previous trading day, with nearly 4,400 stocks declining.

On the trading screen, Trump said he will deliver a stronger show of force against Iran in the coming weeks. Energy and oil-and-gas stocks surged; multiple stocks hit their daily trading limits, including PetroChina Engineering, Beken Energy, and Blue Flame Holding. The pharmaceuticals and pharmaceutical distribution sectors exploded; nearly ten stocks hit their daily trading limits, including Hefei China and Peking University Health. The “strictest-ever” capacity-control measures were implemented; pork-related concepts and animal husbandry sectors strengthened, with Giant Star Agriculture and Animal Husbandry hitting the daily trading limit. In addition, shipping, coal, and some lithium mine stocks were among the top gainers. Meanwhile, the precious metals sector fell, with Xiaocheng Technology down more than 7%. The computing power concept weakened, and Jinkai New Energy led the declines. The film theater chain sector continued to drop; Jinyi Film and Television hit the daily limit downward, and the board closed.

Looking at the details:

The precious metals sector fell, with Xiaocheng Technology down more than 7%, Hunan Gold down more than 5%, and Zhaojin Mining, Sichuan Gold, and Hunan Silver down more than 4%. Western Gold, Zhongjin Gold, Zijin Mining, and Shandong Gold also fell.

In terms of news, Trump delivered a rare national television address from the White House during prime time in the U.S. He tried to reassure American people who were unsettled by financial market turmoil caused by the war and whose political approval ratings were hit, claiming that the war with Iran is “very close” to the end. However, after Trump hinted that military action could escalate in the short term (the next two to three weeks will deliver a heavy blow to Iran), international gold prices immediately plunged, and spot gold once fell to 4650.3 USD per ounce.

The computing power leasing concept saw broad readjustments; Qunxing Toys fell more than 9%, and Yinxin Technology, Xingyun Technology, Litong Electronics, and Uqude fell more than 8%.

Semiconductor stocks fell; Anlu Technology led the declines, while Changchuan Technology (rights protection), Guoxin Technology, Dongxin Shares, and Dagang Shares fell more than 6%.

The film theater chain sector continued to fall; Jinyi Film and Television hit the daily limit downward and closed the board. Huayi Brothers and Baina Chengcheng both fell more than 4%.

Oil-and-gas stocks surged; PetroChina Engineering, Blue Flame Holding, and Beken Energy hit the daily trading limit. Tongyuan Petroleum, Shouhua Gas, Zhongman Petroleum, and Zhunyou Shares all rose.

In terms of news, Trump said today that in the next two to three weeks, the U.S. will deliver a heavy blow to Iran. He also said that if an agreement is not reached, Iran’s energy facilities will be attacked. Iran’s latest military spokesperson statement said that a larger, broader, more destructive attack is about to come. These remarks all point to further escalation in the situation in the Middle East, not the easing that the market previously expected, and the opening time of the Strait of Hormuz will continue to be postponed. Affected by this, international oil prices surged significantly. Brent crude once rose above 108 USD per barrel, and WTI crude once rose above 106 USD per barrel.

The pharmaceuticals distribution and pharma e-commerce sectors surged. Hefei China and Peking University Health hit the daily trading limit. China Healthcare rose more than 8%, and Shuyupingmin and Baiyang Pharmaceutical rose more than 6%. Pharmacy YiGo, Ruikang Pharmaceutical, LaoBaiXing, and Sinopharm Concord both followed higher.

Pork stocks strengthened; Giant Star Agriculture and Animal Husbandry hit the daily trading limit. DaYu Bio rose more than 7%, and Shennong Group and Haid Group and TianKang Bio rose more than 4%. Huwang Shares, Muyuan Shares, and Lihua Shares rose more than 3%.

In terms of news, to maintain stable operation of the pork market and better play the role of central government reserves in regulation, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance are currently carrying out the purchase and storage work for central reserved frozen pork in recent days. Next, the Ministry of Commerce will continue to closely monitor pork market conditions, strengthen trend analysis, work with relevant departments to do a good job of reserve regulation and ensure stable market operations.

Port transportation stocks rose; China Merchants Energy Shipping rose more than 8%, China Merchants Nanyou rose more than 6%, Cosco Shipping Special Logistics rose nearly 5%, and Cosco Shipping Energy, Haitong Development, Xiamen Port, and Cosco Shipping International all rose.

Bank stocks rose against the trend. Agricultural Bank of China rose more than 3%, and YN Rural Commercial Bank, Huaxia Bank, China Construction Bank, Bank of China, and Bank of Communications rose more than 1%.

Looking ahead, China International Capital Corporation (CICC) believes that although there is still uncertainty in the short term, conditions may represent a relative low point for A-share medium-term performance. Risk release and downward adjustment are expected to bring better opportunities for allocation. While the short-term trend still has some uncertainty, after going through an adjustment, risks in the A-share market have been further released, and valuations are at a relatively reasonable level. From a medium-term perspective, the macro environment in which the market operates has not undergone fundamental changes, so the logic supporting A-shares to “move steadily forward” still holds. Risk release and downward adjustment are expected to bring better opportunities for allocation.

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