A-share market closing review | Partial profit-making effect explodes A-share market "continues to play music and dance"! ChiNext rose by 1.45%, hitting a new high in ten years.

On May 7th, the three major A-share indexes opened high and continued to rise throughout the day, with the "AI narrative trading" market continuing and localized profit-making effects exploding! By the close, the Shanghai Composite Index rose by 0.48%, the Shenzhen Component Index rose by 1.18%, and the ChiNext Index rose by 1.45%, reaching a new high in ten years. In addition, the BSE 50 rose by more than 3%, and the Science and Technology Innovation 50 rose by over 1%. The total turnover of the Shanghai and Shenzhen stock markets was 3.14 trillion yuan, a decrease of 82.9 billion yuan from the previous trading day. On the market, most thematic concepts were on the rise, with fiber optic cables, light modules, PCBs, electronic fabrics, and storage chips concepts continuing to surge. Several stocks such as Suzhou Dongshan Precision Manufacturing, Tongding Interconnection Information, and Focuslight Technologies Inc. hit their daily limit up. The humanoid Siasun Robot & Automation concept rebounded, with stocks like Shanghai Hajime Advanced Material Technology hitting the daily limit up. AI marketing, AI animation, and gaming AI application concepts exploded in the afternoon, with several stocks hitting the daily limit up. The photovoltaic concept rebounded, with stocks like Henan Ancai Hi-TechCo., Ltd. hitting the daily limit up. The CPU, semiconductor, and chip concepts remained strong, with stocks like China Greatwall Technology Group and TKD Science and Technology hitting the daily limit up. The power and power grid equipment concepts strengthened, with several stocks like DATANG POWER and Huadian Liaoning Energy Development hitting the daily limit up. Consumer electronics, Google industrial chain, commercial aerospace, military industrial chain, football revitalization, and energy storage concepts were all on the rise. In terms of declines, the Xinduoduo concept stocks plummeted in the afternoon, with Ningbo Menovo Pharmaceutical and Shuifa Gas Co., Ltd. hitting the daily limit down, and Changshu Tianyin Electromechanical falling by over 10%. The cyclical sectors such as coal, oil, chemicals, steel, and natural gas all declined, with Hengyi Petrochemical hitting the daily limit down and Sino Geophysical falling by over 10%. The lithium battery concepts, including lithium resources, electrolytes, lithium iron phosphate, and lithium extraction from salt lakes, all experienced a pullback, with Shida Shinghwa Advanced Material Group approaching the daily limit down. The industrial gas concept also experienced a decline, with Guangdong Huate Gas Co., Ltd. falling by over 10%. Consumer goods such as food and beverage, dairy, and retail continued to show weakness, while agricultural and farming concepts continued to decline. Some financial sectors like banks, securities firms, and securities IT also performed weakly. Looking ahead, Guotai Haitong believes that the upward trend in the Chinese stock market is far from over and is expected to reach a new high. The post-earnings season market breadth is expected to significantly expand, and small and medium-sized themes with industrial catalysts are expected to provide investment opportunities. In terms of industries, emerging technology is the main theme, and there are also opportunities for value investment. Hot sectors: 1. Fiber optic concept is strong The AI industry chain direction is collectively strong, with the fiber optic concept showing active performance. Hangzhou Cable rose for two consecutive days, while Jiangsu Zhongtian Technology and Tongding Interconnection Information hit the daily limit up. Commentary: In terms of news, Nvidia announced a long-term partnership with Corning. Corning will build three new factories in the US, increasing US optical connectivity capacity by 10 times and optical fiber production by over 50%. 2. PCB concept is active The PCB concept exploded, with electronic fabrics and CCL leading the way. Stocks like Jiangsu Jujie Microfiber Technology Group and Sichuan Em Technology hit the daily limit up, reaching historical highs. Stocks like Shandong Fiberglass Group Corp., Baoding Technology, and Jiangsu Xiehe Electronic also hit the daily limit up. Commentary: According to TheElec, with the surge in PCB demand, the delivery period for copper-clad laminates (CCL) has been extended from two weeks to a maximum of six weeks. 3. Photovoltaic concept rebounds The photovoltaic concept rebounded, with Henan Ancai Hi-TechCo., Ltd. hitting the daily limit up. Stocks like OPT, Risen Energy, and Zhejiang Jingsheng Mechanical & Electrical followed suit. Commentary: According to an announcement from the website of Gillespie County, Texas, Musk's aerospace company SpaceX plans to invest $55 billion in building a "phased, next-generation technology, vertically integrated semiconductor manufacturing and advanced computing manufacturing facility" in Texas. If the subsequent stages are completed, the total investment may reach $119 billion. 4. Industrial gas concept shakes and weakens The industrial gas concept shook and weakened, with Shuifa Gas Co., Ltd. hitting the daily limit down, and stocks like Sichuan Shudao Equipment & Technology, Guangdong Huate Gas Co., Ltd., Guangzhou Guanggang Gases & Energy, Suzhou Jinhong Gas Co., Ltd. all falling. Institutional Views: Guotai Haitong: Stock market is expected to reach new highs, market breadth will further expand Guotai Haitong believes that the upward trend in the Chinese stock market is far from over and is expected to reach new highs. Firstly, the April PMI data once again exceeded market expectations, and the non-profit growth rate of all A-shares in the first quarter of 2026 returned to double digits for the first time since 2021, indicating gradual stabilization of traditional Chinese industries, expansion of emerging industries, global expansion of manufacturing, and so on, which are gradually becoming explicit growth logic, and the expected 2026 Chinese economy is expected to be revised upwards. Secondly, after nine months, the capital market was mentioned again in the April heavyweight conference, combined with the recent acceleration of capital market reforms, implying a policy stance of consolidating the stabilization and improvement trend of the capital market. In addition, in the first quarter of 2026, high prosperity in industries such as AI computing power, lithium batteries, and military industry was fully verified, further strengthening the importance of current industry trends in pricing. The institution also stated that the post-earnings season market breadth is expected to significantly expand, and small and medium-sized themes with industrial catalysts are also expected to provide investment opportunities. In terms of industries, emerging technology is the main theme, and there will also be opportunities for value investment. China Securities Co., Ltd.: North America's four major CSPs raise their 2026 capital expenditure outlook, firmly bullish on the AI computing power industry chain The four North American CSPs have announced their first-quarter reports, with continued increases in capital expenditure. The combined capital expenditure of the four major North American CSPs in the first quarter of 2026 was $131.6 billion, a year-on-year increase of 70.25%, and it is expected that the total capital expenditure for 2026 will be $710 billion, with continued high growth expected in 2027. The four major North American cloud giants collectively raised their 2026 capital expenditure outlook and have a positive outlook for 2027 as a whole, indicating that the peak of infrastructure construction for computing power is far from over. They are bullish on the entire AI industry chain, especially the AI computing power industry chain. Huatai: Focus on three clues from the perspective of foreign capital allocation The proportion of Chinese stocks in the portfolios of leading overseas funds in the first quarter of 2026 continues to recover. Looking ahead, it is recommended to focus on three clues in the medium term: 1) Stable ROE and dividends, redemptions with cost-effective valuations, and A50 core assets; 2) Directions for low-value cyclical recovery strengthened under stable growth expectations; 3) Rare global assets favored by foreign capital in the long term, such as Internet technology, consumer leaders, and resource dividends. This article is reprinted from "Tencent Stock Selection", edited by GMTEight: Jiang Yuanhua.