Zhongyuan Strategy: Battery Electronics Industry Leads the Rally, A-shares First Decline then Rise

Key Points

Overview of the A-Share Market

On Friday (February 6), the A-share market experienced a decline followed by a rebound, with slight fluctuations and consolidation. In the morning, the indices opened lower and then retreated; during the session, the Shanghai Composite Index found support near 4029 points, then stabilized and recovered. Industries such as batteries, electronic components, consumer electronics, and general equipment performed relatively well; sectors like brewing, commercial retail, aerospace, and tourism hotels underperformed. Throughout the day, the Shanghai Composite Index showed a pattern of small fluctuations and consolidation. The ChiNext Market also declined on Friday, with its main index underperforming the main board throughout the day.

Market Outlook and Investment Recommendations

On Friday, the A-share market initially declined then rebounded, with slight fluctuations and consolidation. The indices opened lower and retreated in the morning; during the session, the Shanghai Composite Index found support near 4029 points, then stabilized and recovered. Industries such as batteries, electronic components, consumer electronics, and general equipment performed well; sectors like brewing, retail, aerospace, and tourism hotels lagged. The Shanghai Composite Index exhibited a pattern of small fluctuations and consolidation throughout the day. Currently, the average P/E ratios of the Shanghai Composite and ChiNext indices are 16.75x and 51.98x respectively, above the median levels of the past three years, making them suitable for medium- to long-term positioning. The total trading volume on Friday was 2,163.6 billion yuan, above the median daily volume of the past three years. Although the official manufacturing PMI for January slightly declined, manufacturing sectors such as equipment manufacturing and high-tech manufacturing remain in expansion territory, indicating ongoing industry structure optimization. The effects of growth stabilization policies are expected to gradually manifest in the first quarter. Typically, the first quarter is the most liquidity-rich period of the year, with the central bank maintaining a prudent and moderately loose monetary stance. The nomination of the new Federal Reserve Chair has led to a reassessment of the rate cut pace, causing a short-term rebound in the US dollar index and exerting some pressure on global capital flows into emerging markets. Investors are advised to adopt a more balanced allocation strategy, continuing to focus on technological growth themes like AI and high-end manufacturing, while actively exploring investment opportunities in certain consumer sectors. The Shanghai Composite Index is likely to maintain a slight upward fluctuation; investors should pay close attention to macroeconomic data, overseas liquidity changes, and policy developments. In the short term, focus on investment opportunities in industries such as batteries, electronic components, consumer electronics, and general equipment.

Risk Warning: Overseas unexpected recession affecting domestic economic recovery; domestic policy and economic recovery progress below expectations; macroeconomic shocks exceeding expectations; policy changes beyond forecasts; changes in international relations impacting the economic environment; overseas macro liquidity tightening beyond expectations; increased overseas volatility.

Main Report Content

1. Overview of the A-Share Market Trends

On Friday (February 6), the A-share market experienced a decline followed by a rebound, with slight fluctuations and consolidation. The morning session saw the indices opening lower and then retreating; during the session, the Shanghai Composite Index found support near 4029 points, then stabilized and recovered. Industries such as batteries, electronic components, consumer electronics, and general equipment performed relatively well; sectors like brewing, retail, aerospace, and tourism hotels underperformed. Throughout the day, the Shanghai Composite Index showed a pattern of small fluctuations and consolidation. The ChiNext Market also declined, with its main index underperforming the main board throughout the day. The Shanghai Composite closed at 4065.58 points, down 0.25%; the Shenzhen Component closed at 13,906.73 points, down 0.33%; the STAR 50 Index fell 0.71%; the ChiNext Index declined 0.73%. The combined trading volume of the Shanghai and Shenzhen markets was 2,163.6 billion yuan, slightly lower than the previous trading day.

In terms of market hotspots, over 50% of stocks rose. Leading sectors in gains included mining, energy metals, jewelry, batteries, and chemical raw materials; sectors such as retail, brewing, tourism hotels, aerospace, and media lagged. Net capital inflows were prominent in batteries, chemical products, electronic components, minor metals, and consumer electronics; net outflows were observed in communication equipment, internet services, media, software development, and non-ferrous metals.

2. Market Outlook and Investment Recommendations

On Friday, the A-share market experienced a decline followed by a rebound, with slight fluctuations and consolidation. The indices opened lower and retreated in the morning; during the session, the Shanghai Composite Index found support near 4029 points, then stabilized and recovered. Industries such as batteries, electronic components, consumer electronics, and general equipment performed well; sectors like brewing, retail, aerospace, and tourism hotels lagged. The Shanghai Composite Index exhibited a pattern of small fluctuations and consolidation throughout the day. Currently, the average P/E ratios of the Shanghai Composite and ChiNext indices are 16.75x and 51.98x respectively, above the median levels of the past three years, suitable for medium- to long-term deployment. The total trading volume on Friday was 2,163.6 billion yuan, above the median daily volume of the past three years. Although the official manufacturing PMI for January slightly declined, manufacturing sectors such as equipment manufacturing and high-tech manufacturing remain in expansion territory, indicating ongoing industry structure optimization. The effects of growth stabilization policies are expected to gradually manifest in the first quarter. The first quarter is typically the most liquidity-rich period of the year, with the central bank maintaining a prudent and moderately loose monetary stance. The nomination of the new Federal Reserve Chair has led to a reassessment of the rate cut pace, causing a short-term rebound in the US dollar index and exerting some pressure on global capital flows into emerging markets. Investors are advised to adopt a more balanced allocation strategy, continuing to focus on technological growth themes like AI and high-end manufacturing, while actively exploring investment opportunities in certain consumer sectors. The Shanghai Composite Index is likely to maintain a slight upward fluctuation; investors should pay close attention to macroeconomic data, overseas liquidity changes, and policy developments. In the short term, focus on investment opportunities in industries such as batteries, electronic components, consumer electronics, and general equipment.

(Source: Zhongyuan Securities)