Closing Comment: Shanghai Index Falls 0.81%, Chemical Sector Strengthens Against the Trend

Special Topic: The Two Sessions Conclude with a Clear Focus on the “14th Five-Year Plan” Start; Institutional Recommendations for Policy-Driven Opportunities in Five Major Sectors

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March 13 News: The market experienced a day of oscillation and adjustment, with a rapid decline at the close, and the Shanghai Composite Index fell more than 1% intraday. The combined trading volume of the Shanghai and Shenzhen markets was 2.4 trillion yuan, down 416 billion from the previous trading day. From sector perspective, the chemical industry continued its strength, with Sanfangxiang and Luxi Chemical (rights protection) hitting two consecutive limit-ups, and stocks like Jinzengda, Hongbaoli, and Chitianhua also hitting the daily limit. The wind power sector was active again, with Dajin Heavy Industry hitting two consecutive limit-ups, Tongyu Heavy Industry up 20%, and Tianshun Wind Energy hitting the limit. The controlled nuclear fusion concept surged rapidly, with Lansi Heavy Equipment, China Nuclear Construction, and Jiangsu Shentong hitting the limit. On the downside, the computing power leasing concept retreated collectively, with Meili Cloud and Huasheng Tiancheng both hitting the limit-down. The nonferrous metals and tungsten concepts continued to decline, with China Tungsten High-tech and Zhangyuan Tungsten falling to the limit.

At the close, the Shanghai Composite Index fell 0.81%, the Shenzhen Component Index down 0.65%, and the ChiNext Index down 0.22%.

Market overview shows that some sectors repeatedly strengthened, while individual stocks mostly declined, with over 3,800 stocks falling across the market.

Hot Sectors:

1. Innovative Drugs

News: Industrial Securities believes that China’s innovative drugs have entered the 3.0 era, with global competitiveness continuously strengthening. The clinical progress of overseas products will be key to valuation increases, and policy support along the entire chain and payment system optimization will help improve business models.

2. Real Estate

News: Shenzhen Beike Research Institute’s latest monitoring data shows that in February this year, the number of second-hand homes listed by its partner stores decreased by 3.3% year-on-year. Chongqing Housing and Urban-Rural Development Commission’s latest data indicates that the transaction volume of commercial housing increased by 7.27% year-on-year, with the transaction price up 0.3% year-on-year. The proportion of high-quality “good houses” in transaction area reached 28%.

News Highlights:

【First Invasive Brain-Computer Interface Medical Device Approved for Market】 Recently, the National Medical Products Administration approved the registration application of Borreli Medical Technology (Shanghai) Co., Ltd.‘s implantable brain-computer interface hand motor function compensation system, achieving the world’s first launch of a brain-computer interface medical device. This marks the entry of the world’s first invasive brain-computer interface medical device into clinical application. The product includes a brain-computer interface implant, implantable EEG electrode set, EEG signal transmitter/receiver, pneumatic glove device, disposable surgical kit, EEG decoding software, medical testing software, and clinical management software. It is suitable for patients with quadriplegia caused by cervical spinal cord injury, assisting hand grasp function through pneumatic gloves. Patients must meet the following conditions: aged 18-60, with C2-C6 cervical spinal cord injury rated A-C, diagnosed more than 1 year ago, stable after standardized treatment for at least 6 months, unable to grasp with hands, but with some remaining upper arm function. The product uses minimally invasive extradural implantation and wireless energy communication technology. Clinical trials show significant improvement in hand grasp ability, thereby enhancing patients’ quality of life.

【Ministry of Commerce Responds to US Initiation of Section 301 Investigations on China and 15 Other Economies】 The Ministry of Commerce spokesperson responded to the US Trade Representative Office’s announcement of initiating Section 301 investigations against 16 economies, including China, on grounds of “overcapacity.” A reporter asked: On March 11, US time, the USTR announced the initiation of Section 301 investigations against 16 economies, including China, citing “overcapacity.” What is China’s comment?

Answer: China notes that the US has initiated Section 301 investigations against 16 economies, including China, on grounds of “overcapacity.” Such investigations are typical unilateral actions that severely disrupt the international trade order. WTO expert panels have already ruled that tariffs imposed based on Section 301 investigations violate WTO rules.

Regarding the US’s so-called “overcapacity” argument, China has repeatedly clarified its position. The global economy has long become an inseparable whole, with production and consumption being global phenomena that require supply and demand matching and regulation on a global scale. If production only meets domestic demand, cross-border trade would not exist. The US cannot narrowly define excess capacity beyond domestic needs as “overcapacity” and label it as such. Moreover, the US has no right to unilaterally determine whether its trading partners have “overcapacity” through Section 301 investigations and impose unilateral restrictions. China also notes that the US has initiated another Section 301 investigation against 60 economies, including China, over “forced labor products,” and China is analyzing and evaluating this.

China urges the US to correct its wrongful practices and return to the correct path of resolving issues through dialogue and consultation. China will closely monitor developments and reserves the right to take all necessary measures to defend its legitimate rights and interests.

【He Lifeng to Lead Delegation to France for US-China Economic and Trade Consultations from March 14-17】 The Ministry of Commerce spokesperson answered questions about China-US economic and trade negotiations. A reporter asked: We note that China and the US will hold the 6th round of economic and trade consultations soon. Does the Ministry of Commerce have any updates?

Answer: According to an agreement between China and the US, He Lifeng, a member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will lead a delegation to France to hold economic and trade consultations with the US from March 14 to 17. The two sides will base discussions on the important consensus reached during the summit in Busan and previous phone calls, focusing on mutual concerns in trade and economic issues.

Institutional Views:

CaiXin Securities believes that as the Middle East situation’s marginal disturbance diminishes and the Two Sessions conclude, the market may gradually return to its own rhythm. The overall trend of the market is not to be overly optimistic, mainly due to two reasons: first, the ongoing uncertainty about energy supply caused by Middle East tensions and rising global inflation fears; second, the upcoming earnings season in A-shares, which increases focus on performance risks. Both factors will suppress market risk appetite, potentially leading to continued wide-range fluctuations. In the short term, capital may favor sectors with improving fundamentals, and investors can consider participating in structural opportunities with reasonable position control. In the medium term, external macro events still influence the trend, and a sustained trend may require waiting until late April, with likely increased volatility. It is recommended to control positions prudently and wait for clear market turning signals. It is also important to note that recent regulatory efforts to strengthen strategic reserves and stabilize the market have significantly reduced volatility in A-shares, which are expected to remain resilient compared to overseas markets, so excessive worry is unwarranted.

Bohai Securities suggests that during the Two Sessions, the market remains cautious overall. However, even with increased volatility due to Middle East tensions and oil prices, A-shares have demonstrated resilience, reflecting stability in the capital market. In the short term, the market may continue to oscillate, but in the medium term, a rebound with oscillating upward trend is more likely. As the first-quarter earnings reports approach, market focus may shift further toward performance, attempting to drive structural growth.