A-shares Market Close: Shanghai Composite Index up 0.63%, Lithium batteries and CRO surge! Power stocks pull back

On March 27, China’s A-share three major index funds rose across the board. The Shanghai Composite Index rose 0.63% to 3,913 points, the Shenzhen Component Index rose 1.13%, and the ChiNext Index rose 0.71%.

Total trading volume across the market was 1.86 trillion yuan, down 93.2 billion yuan from the prior trading day, with more than 4,300 stocks rising.

On the trading front, expectations that Zimbabwe’s lithium export ban would be lifted failed to materialize, and lithium battery and lithium mining concept stocks surged. CRO and innovative drug sector stocks moved higher, while sectors such as fertilizers, phosphate chemical industry, titanium dioxide, and small non-ferrous metals saw the largest gains. In addition, power stocks pulled back, bank stocks generally fell, coking coal-related stocks dropped, and sectors such as ports, insurance, and public utilities led the declines.

Looking at it in detail:

Lithium battery and lithium mining concept stocks surged. Multiple stocks, including Ganfeng Lithium, Shengxin Lithium Energy, Rongjie Co., Ltd., and Jiangte Electromechanical, hit their daily trading limits. Huatai Securities said that liquidity contraction and changes in risk appetite brought about by events in the Middle East caused earlier lithium prices to trade with a weak range-bound pattern. However, considering that supply disruption risks still exist in the second half of the year in China’s Yichun region and overseas regions such as Zimbabwe, and that on the demand side, high oil prices are expected to boost demand for electric vehicles and energy storage, in 2026, if it follows the neutral expectation assumption (global new energy vehicle sales year-on-year growth of 10%-15%, energy storage battery cell shipments year-on-year growth of 50%-60%), global battery-grade lithium carbonate is expected to maintain a tight supply-demand balance.

CRO and innovative drug sector stocks rose, with multiple stocks including Hotgen Biotech, Innovent Biopharmaceuticals (Zhaoyan New Drug), and Kanghong Pharmaceutical hitting daily trading limits. Institutions said that the left-side allocation window for the innovative drug sector is clear, and that April will enter a period with a high density of catalysts. With industry conferences such as AACR and ASCO overlapping with the release of annual reports and first-quarter reports, valuations of the sector are expected to be repaired. Platform-based biopharma companies and firms with normalized BD revenue have a stronger win rate and higher upside flexibility, and their long-term investment value is significant.

Fertilizer and phosphate chemical sector stocks rose. Multiple stocks, including Sinochem Fertilizer (Sixiang Fertilizer), Chitianhua, Lubei Chemical, and Jinzengd, hit daily trading limits. In terms of news, shipping disruptions in the Strait of Hormuz led to a disruption of the global fertilizer supply chain, causing urea and sulfur prices to soar by 30%～40%, widening the international supply-demand gap.

Precious metals strengthened. Chifeng Gold rose more than 6%, Shanjin International rose more than 5%, and Hunan Gold rose more than 3%. In terms of news, spot gold today rose above 4,450 USD/ounce, and spot silver rose above 70 USD/ounce. CICC said that after past Middle East conflicts, the medium-term trend of gold prices still depends on factors such as U.S. dollar credit and liquidity. Looking ahead to this round of conflict, it is expected that the continuation of two major trends—easing liquidity and weakening dollar credit—will keep pushing up gold prices. Historically, valuation or price-quantile advantages can reinforce upside space for gold. Currently, the PE valuation level of leading companies has fallen to 15-20x, the historical low. Meanwhile, considering that recent peaks in stock prices and gold prices have been highly synchronized, the market expects stock prices to make new highs driven by new highs in gold.

Power stocks pulled back. Guangdong Power A, Hunan Development, Energy-saving Wind Power, and Zhejiang New Energy fell by more than 7%, and multiple other stocks such as Huadian New Energy fell by more than 6%. However, Everbright Securities said that the power sector is at a phase of valuation trough; with the “Token overseas expansion” catalyst under domestic electricity price advantages, it presents an opportunity for sector-wide valuation repair. The recommendation is to deploy in “electricity computing” business and focus on power utilities whose valuations offer configuration-level cost-effectiveness.

Bank stocks fell broadly. Ruifeng Bank led the decline, down nearly 4%, Yuzhou Rural Commercial Bank fell by more than 2%, and Ningbo Bank and Postal Savings Bank of China and Industrial Bank followed lower. CICC said that in 2025, compared with the overall upward trend in the third quarter, the central level of government bond yields in the fourth quarter is expected to remain stable and trade within a range with choppy movement. It expects year-on-year pressure on banks to ease on a quarter-on-quarter basis for other non-interest income in the fourth quarter versus the third quarter, but considering the higher base in the fourth quarter, year-on-year growth rates will still face pressure.

Looking ahead, Zhongyuan Securities believes the market’s current core headwinds come from overseas. If the Middle East conflict further escalates, it could trigger sustained spikes in oil prices and exacerbate global stagflation pressure. If U.S. inflation continues to run above expectations, the Federal Reserve may delay rate cuts or even resume rate hikes, which would weigh on global liquidity and risk appetite.

Given that China’s domestic macro policy direction is becoming clearer and provides solid downside support for the market, it is recommended to closely monitor macroeconomic data, changes in overseas liquidity, and policy developments.