A-share midday report | Shanghai Composite Index rises 0.59% in the morning, with over 4400 stocks in the market turning red, and pharmaceutical stocks are collectively strong.

On April 1, the A-share market rebounded in the morning, with over 4400 stocks trading higher. By midday, the Shanghai Composite Index rose by 0.59%, the Shenzhen Component Index rose by 0.57%, and the ChiNext Index rose by 0.67%. Market analysis believes that there are three main reasons for the index rebound: Firstly, last night, the People's Bank of China announced a fixed-rate bid for 800 billion yuan through reverse repurchase operations to maintain liquidity in the banking system until March 2025. Secondly, the March Caixin China Manufacturing Purchasing Managers' Index (PMI) recorded 51.2, a 0.4 percentage point increase from February, reaching a new high since December 2024, indicating continued rapid expansion in manufacturing production activities. Thirdly, in terms of industries, the pharmaceutical sector received multiple positive news, with the state-owned Assets Supervision and Administration Commission encouraging state-owned enterprises to carry out mergers and acquisitions in the biopharmaceutical field. In addition, the China Food and Drug Administration accelerated the revision of universal standards for medical robots and artificial intelligence medical devices. In terms of market performance, pharmaceutical stocks rallied, with leading subsectors like innovative drugs, traditional Chinese medicine, and brain-computer interfaces. Oil and gas and power stocks also rose, with Xinjiang Lixin Energy registering consecutive limit-up sessions. Photovoltaic concept stocks shook off, with EGing Photovoltaic Technology hitting the limit-up. Additionally, sectors like consumer goods and military industry performed well. On the downside, internet e-commerce, precious metals, automotive, and media sectors fell the most. Regarding individual stocks, Shandong Meichen Science & Technology and Royal Group Co., Ltd. both opened limit-down due to suspected violations of information disclosure regulations. Looking ahead, Huatai Securities maintains that the index is in a consolidation phase until the two major "boots" of tariffs and performance periods land. Popular Sectors: 1. Pharmaceutical sector strength Pharmaceutical stocks rallied, with innovative drugs and traditional Chinese medicine leading the way. Chengda Pharmaceuticals, Tibet Duo Rui Pharmaceutical, Gansu Longshenrongfa Pharmaceutical Industry, Zhuhai Rundu Pharmaceutical, Harbin Medisan Pharmaceutical, and other stocks hit the limit-up. 2. Photovoltaic sector rebound Photovoltaic concept stocks rebounded, with EGing Photovoltaic Technology hitting the limit-up. Ginlong Technologies, Jiangsu Goodwe Power Supply Technology Co., Ltd., Sungrow Power Supply, Wuhan DR Laser Technology Corp., Sineng Electric, Yuneng Technology, Jinko Solar, and others followed suit. 3. Oil and gas sector rise Oil and gas stocks surged, with Hunan Heshun Petroleum gaining 4 limit-up sessions in 5 days. Xinjiang Zhundong Petroleum Technology also hit the limit-up, along with Tong Petrotech Corp., Geo-Jade Petroleum Corporation, Zhongman Petroleum And Natural Gas Group Corp., Ltd. Institutional Views: 1. Guotai Junan: Consolidation will continue, staying put is crucial Guotai Junan believes that with limited upward potential, uncertainties have increased, and the stock market may enter a consolidation phase. Staying put is crucial, as April is a crucial month for stock market performance. They are optimistic about sectors benefiting from expanded policies and local initiatives. Investing in technology growth with clear industry trends and high order fulfillment rates is recommended. They are positive about cyclical industries benefiting from optimized supply-side or new demand-driven price hikes. Themes to watch for include autonomous control, aging economy, AI intelligence, and mergers and acquisitions. 2. Huatai: Preparing for the two major "boots" before they land Huatai points out that looking ahead, before the two major "boots" of tariffs and performance periods land, the index remains in a consolidation phase. Internationally, concerns about stagflation have increased due to the US's February PCE and consumer data. The uncertainty of policy risks before the implementation of "tariffs" on April 2 and the unexpected intensity afterward are key factors to consider.The risk still needs to be taken seriously. In terms of the domestic market, there is greater pressure on the realization of annual and first quarter performance, with small caps potentially facing even greater pressure than large caps. In terms of allocation, it is recommended to continue to increase allocation in large caps, dividends, and low-price+resilient or improving sectors with high cost-effectiveness, such as white goods, aviation, batteries, and construction machinery; broad technology is still the medium-term theme, consider low allocation of storage, edge AI, etc., and pay attention to whether XinKailai can become a "DeepSeek" moment in semiconductor equipment.Orient: The stock index continues to maintain a bottom-scanning trend, with sector rotation still focused on performance. Orient pointed out that looking ahead to the market in April, the stock index will still maintain a bottom-scanning trend, but the probability will not be too deep. The market's demand for certainty in performance is gradually increasing, and sector rotation still revolves around performance. However, from a game perspective, sectors that can attract popularity are undoubtedly technology stocks. Taking TMT as an example, the overcrowding rate was as high as 45% before, but has now dropped to around 32%. It is reasonable for some funds to bottom fish yesterday, so "technology + dividend" is a good investment strategy at present.