Last night, the innovative drugs, copper, and automotive sectors, which were hyped up, all experienced a sharp rise followed by a plunge, severely dampening market sentiment. This also led to a significant drop in the A-shares at one point during the trading session. However, the national team intervened again at the end of the day to support the market, coupled with the resolute buying by Northbound capital, the index rebounded from its lows.
The ecosystem of A-shares is truly harsh, with a strong flavor of speculation. Once the market rises to a certain extent, favorable funds will definitely be cashed in. Domestic institutional investors are also completely fickle. We reviewed the minutes of institutional communications, and last week most institutions believed that the A-shares had risen about as much as they could, lacking upward momentum. This week, funds began to sell. In contrast, foreign capital has been buying for five consecutive trading days, not even selling out of caution when the US CPI data was announced on Tuesday. Today, there was a net purchase of over 6.4 billion for the entire day. Without foreign capital, the market might not have been able to hold up.
Now, let's look at today's major news:
Innovative Drugs
After the A-shares market closed yesterday, a document titled "Full Chain Support for the Development of Innovative Drugs" was widely circulated. Although the A-shares market had closed, the Hong Kong market was still open, so the innovative drugs sector in the Hong Kong market surged at the end of the day. The innovative drug stocks in the US market also rose significantly yesterday, with BeiGene, a domestic company, surging by 7.77%.
Today, as expected, the innovative drugs sector opened higher, with the Hong Kong innovative drugs ETF approaching the daily limit at the open. However, during the trading session, WuXi AppTec was involved in another controversy. According to a report by Caixin, the well-known US organization BIO is taking steps to remove WuXi AppTec's membership and support the "Biological Security Law."
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Yes, it's WuXi AppTec again. This issue has repeatedly caused significant damage to the pharmaceutical sector. Today, WuXi AppTec plunged during the trading session, falling by more than 8% at one point, and closed down nearly 6%. However, innovative drug stocks with their main business in China were not affected, with stocks like Zhaoyan New Medicine, Aosaikang, Cellon Pharmaceutical, and Luoxin Pharmaceutical hitting the daily limit. Previously, when sellers were promoting innovative drugs, they emphasized how they were receiving overseas orders and were not affected by domestic bulk procurement. Now, the overseas business has become a minefield to avoid.Copper
Last night, copper prices surged significantly, with COMEX copper soaring by over 3%. The main Shanghai copper contract broke through the 70,000 yuan mark with a gap-up opening and set a new high for nearly two years.
There are several reasons for the copper price spike: similar to the gold price surge, copper also benefits from the Federal Reserve's interest rate cuts. However, as an industrial metal, copper's main logic is macroeconomic, while gold has more asset allocation attributes and is more closely related to the US dollar and US Treasury rates. The bottoming and rebound of global manufacturing, coupled with the stabilization and recovery of China's economy, are expected to boost the demand for industrial metals such as copper and aluminum. In the short term, the stimulus news is the expectation of production cuts. According to the fast news from Wenhua Financial, the Nonferrous Metals Association convened a meeting of large Chinese smelters to discuss the current tight raw material supply and the rapid decline in processing fees, with a strong expectation of production cuts.
Driven by the surge in copper futures last night, the copper sector in the A-share market opened sharply higher today, but also followed the market's dive, with Northern Copper Industry hitting the daily limit, and Western Mining, Tongling Nonferrous, and Electrician Alloys all seeing significant gains.
There were also two major news items last night:
The State Council issued the "Action Plan for Promoting Large-Scale Equipment Updates and Consumer Goods Replacement." The plan points out that it will increase policy support, unblock circulation bottlenecks, and promote tiered consumption and renewal consumption of automobiles. It organizes national auto replacement promotion activities, encourages auto manufacturers and sales companies to carry out promotional activities, and guides the industry to compete in an orderly manner.
Premier Li Qiang of the State Council conducted research in Beijing on March 13, emphasizing that artificial intelligence is an important engine for developing new quality productive forces. He called for strengthening forward-looking layout, accelerating the improvement of computing power, promoting algorithm breakthroughs and data development and utilization, and vigorously carrying out the "AI+" initiative.
We will not analyze these two pieces of news in detail as they are similar to previous ones. Looking at the market, by the close, the Shanghai Composite Index fell by 0.18%, the ChiNext Index fell by 0.64%, the Hang Seng Index fell by 0.71%, and the Hang Seng Technology Index fell by 1.44%. The turnover in the two markets slightly shrank to 1007.2 billion, with more than 3,500 stocks falling.Looking at the industries, non-ferrous metals, environmental protection, petroleum and petrochemicals, coal, real estate, and other sectors led the gains, while media, electronics, defense and military, computers, and other industries led the declines. The technology sector saw the largest drop, as Foxconn's performance did not meet expectations last night, and its stock price nearly hit the daily limit down during trading, affecting the sentiment of the AI sector. However, in reality, AI cloud computing business has indeed shown growth.
The main theme of AI, which was prominent in the previous period, began to adjust this week (servers like Inspur Information and Sugon started adjusting last week), and then the market successively rotated to photovoltaic, new energy vehicles, liquor, and pharmaceuticals. It can be said that all sectors have taken a turn, but the sustainability of photovoltaic to liquor is not strong, lacking the ability to drive the overall market like AI. After a rise of one or two days, they take a break. Although we believe that this week's rotation is not just about capital moving from high to low, but more about the market's risk appetite rising, leading to increased allocation of core assets by funds, after such a rotation, someone needs to step up. AI, which adjusted first, has the most hope, otherwise, without a main theme to lead the index, there is pressure for a correction.