A-share closing review | Three positive factors boost morale! The Shanghai Composite Index stabilizes at 3600 points, and the concept of the Hainan Free Trade Zone triggers a surge in limit-up stocks.

On July 24, A-shares fluctuated and rebounded, with the Shanghai Composite Index closing above the 3600-point mark. According to Securities China, analysts believe there are three reasons for this: Firstly, Hainan closed its borders and for the first time achieved "zero tariffs" for imports within the region, significantly increasing the pace and scope of opening up. Secondly, combined with the events of the Yajiang hydropower station and the "anti-insulation" movement, these three major events are enough to boost market confidence. Thirdly, with the policies related to the supply side and demand side being enforced, the economic stabilization expectations for the second half of the year are increasing, which is favorable for the overall market momentum. In the market, catalyzed by the border closure policy, the Hainan free trade zone concept triggered a surge, leading to nearly 20 stocks including China Tourism Group Duty Free Corporation and Hainan Airport Infrastructure hitting the limit-up; the "market leader" securities firms, diversified financials, and financial stocks surged, with Hainan Haide Capital Management hitting the limit-up; lithium mines, rare earths, and other energy metal stocks strengthened again, with China Northern Rare Earth hitting a three-year high limit-up; the chip industry chain rose, with Shenzhen Easttop Supply Chain Management hitting the limit-up; the recently hot Yabai hydropower concept showed a divergence, with multiple stocks including Tibet Tianlu hitting four consecutive limit-ups, while Shanxi Huhua Group saw a sharp decline. In addition, film and television, military, battery, and biopharmaceutical sectors all showed some performance. On the downside, precious metals, banks, and communication equipment sectors were in the red. In terms of individual stocks, there were 4391 gainers and 914 decliners across both markets, with 113 unchanged, 79 limit-up, and 2 limit-down. By the close of trading, the Shanghai Composite Index rose 0.65% to 3605.73 points, with a turnover of 852.2 billion yuan; the Shenzhen Component Index rose 1.21% to 11193.06 points, with a turnover of 992.5 billion yuan. The Growth Enterprise Index rose 1.50% to 2345.37 points. Funds Flow Today, major funds flowed into securities, small metals, energy metals, semiconductors, and general steel industries; while funds flowed out of infrastructure, chemical products, communication equipment, electricity, and general equipment industries. Headlines Review 1. National Medical Insurance Administration: Selection of centralized procurement no longer simply based on lowest bid price Shi Zihai, Deputy Director of the National Medical Insurance Administration, stated in response to questions from reporters that the eleventh batch of centralized procurement has recently started. The administration is researching and optimizing specific rules. In terms of selection rules, the calculation of price differentials is optimized, no longer simply based on the lowest bid price. For the selected enterprise with the lowest bid, the rationality of the bid price should be publicly explained, and a commitment should be made to not quote below the cost price. 2. Thai military: Preparing to deploy 6 F-16 fighter jets in Thai-Cambodian border area On the 24th local time, after clashes between Thai and Cambodian forces in the border area, the Thai military stated that it is preparing to deploy 6 F-16 fighter jets in the Thai-Cambodian border area. 3. Lithium carbonate futures main contract hits limit-up intraday On July 24, the main contract for lithium carbonate futures hit the limit-up intraday, reaching 77,240 yuan/ton, up 8%. Market Outlook 1. Dongguan Securities: Long-term upward trend unchanged Dongguan Securities stated that the market encountered resistance and fell around 3600 points, showing short-term adjustment pressure on the technical side. However, the long-term upward trend remains unchanged, and attention should be paid to changes in trading volume and the pace of policy implementation. Since the end of June, the total market value of A-shares has been stable above 100 trillion yuan, reflecting the continuous expansion of the market size, the effectiveness of the high-quality development of the capital market, and the confidence of global funds in the Chinese market. 2. Huatai: The upward trend will continue, but beware of sharp declines Huatai stated that from the recent market performance, there is a strong willingness of funds to go long. Even if there are intra-day sell-offs, funds will enter quickly. If everyone is waiting for a major drop to buy at the bottom, then the correction may not come easily. From the performance of themes, the phenomenon of opening high and falling low has not occurred, and the sustainability of thematic speculation has increased. Some investors may say that technology stocks have not performed well, but if this bull market is effective, all sectors will rotate, and the technology sector will also play a crucial role when the index breaks through. In the short term, whether the market turnover can return to 2 trillion yuan is worth watching. The fact that margin balance is once again at a historical high indicates that the current market trading enthusiasm is high, the upward trend will continue, and sharp declines should be watched out for, but there is no need to be overly concerned. The important meeting at the end of the month will provide guidance on future market investment opportunities, and attention should be paid to whether there will be policies related to childbirth. 3. Cinda: Undervalued cyclical stocks surge, may indicate bull market entering main uptrend phase Cinda stated that previously oversupplied cyclical industries (such as photovoltaics, steel, and chemicals) have recently started to perform well. This diffusion may be a signal that the bull market is entering the mid-term main uptrend, primarily due to valuation. In the early stages of a bull market, there is limited incremental funds in the stock market and slow price increases. At this time, the sectors that can rise are mainly those with industry logic and performance. However, in the mid to later stages of a bull market, household funds will increase, and most industries will have decent valuation increases. Cyclical stocks hardly saw a valuation increase in the early stages of the bull market, so in the mid-term of the bull market, their valuation advantage stands out. Once there is policy catalyst or fundamental improvement, there is a high probability that the stock prices will outperform the index.