A-share market review | Shanghai Composite Index fell by 0.25%, market differentiation, consolidation, strong performance in the optical communication concept.

Today, the market is trading sideways, with the Shanghai Composite Index and the Shenzhen Component Index slightly falling, while the Growth Enterprise Index and the ChiNext 50 Index are relatively strong. The market's total turnover for the day was 3.2 trillion, decreasing by nearly 300 billion from the previous trading day, with more than 4000 declining stocks in the two markets. According to market performance and analysis from multiple authoritative institutions, the differentiation adjustment in A-shares today is mainly due to the following reasons: Firstly, the ongoing turmoil in the Middle East continues to stir the market. Due to the lack of progress in US-Iran negotiations, the US is now "more seriously considering" resuming military action against Iran. There are differing opinions within the US government on the Iran issue. Some officials advocate for a tougher stance, including more targeted strikes to weaken Iran and force concessions at the negotiation table, while others prefer to give diplomatic negotiations more time. Secondly, A-shares surged on May 11th, accumulating significant profits, leading to a natural technical correction demand in the market today. Analysts point out that after heavy trading volume, continued strong attacks are often difficult to sustain, and the market needs time to consolidate at high levels to digest excess positions. Thirdly, institutions like Soochow point out that some technology sectors have experienced excessive short-term gains, with trading congestion reaching high levels after accelerated rises, increased fund divergences, and profit-taking pressures. Today, the semiconductor and storage chip sectors, which led the gains yesterday, weakened, showing a normal differentiation after structural overheating. On the market front, the optical communication concept continued to be strong, with the trillion-dollar leader Zhongji Innolight soaring more than 8%, breaking through 1000 yuan, hitting a new historical high. The power cable equipment sector showed a fluctuating uptrend, with Fujian Nanping Sun Cable, Qingdao Hanhe Cable, and Dalian Insulator Group hitting the limit up. The fiber optic concept showed strength against the trend, with Tongding Interconnection Information hitting a 4-day limit up. The Siasun Robot & Automation concept was active against the trend, with Zhejiang Baida Precision Manufacturing Corp. and Jintuo Technology hitting the limit up. On the downside, the pork concept underwent a fluctuating adjustment, with Zhejiang Huatong Meat Products hitting the limit down, and Tecon Biology Co.Ltd, Shenzhen Kingsino Technology, Wens Foodstuff Group, and Jiangxi Zhengbang Technology leading the losses. Looking at individual stocks, out of the 1379 companies that rose in the two markets, 4048 companies fell, with 88 companies maintaining flat growth. There were 94 stocks that hit the limit up and 34 stocks that hit the limit down in both markets. By the close, the Shanghai Composite Index fell by 0.25% to 4214.49 points, with a turnover of 1465.3 billion yuan; the Shenzhen Component Index fell by 0.47% to 15824.92 points, with a turnover of 1777.4 billion yuan. The Growth Enterprise Index rose by 0.15% to 3934.88 points. Funds Flow Today, the main funds focused on grabbing shares in the power cable equipment, securities, and electric power sectors. The top stocks in terms of net inflows of main funds included Eoptolink Technology Inc., Zhongji Innolight, and Zijin Mining Group. Key News Recap 1. Insider sources revealed: the U.S. may consider resuming military action against Iran On the 11th, news from the US side stated that internal sources in the US government revealed that due to the lack of progress in US-Iran negotiations, the US is now "more seriously considering" resuming military action against Iran. There are differing voices within the US government on the Iran issue. Some officials advocate for a tougher stance, including more targeted strikes to weaken Iran and force concessions at the negotiation table, while others prefer to give diplomatic negotiations more time. 2. Shanghai Microsystem: New flexible monocrystalline silicon solar cells to conduct space experiments with Tianzhou-10, laying the foundation for space photovoltaics China Academy of Sciences Shanghai Microsystem Institute announced today that on May 11, Tianzhou-10 cargo spacecraft was successfully launched from Wenchang, carrying 41 on-orbit scientific experiment payloads heading to the Chinese space station. Among them, the independently developed flexible encapsulated monocrystalline silicon solar cells by the research team of Shanghai Microsystem Institute will conduct space environment on-orbit experiments, laying the foundation for China's commercial aerospace, space computing power and space photovoltaic industry. Subsequently, the solar cells will be placed on the space station's material experimental platform to conduct space environmental experiments such as particle irradiation, ultraviolet irradiation, atomic oxygen, etc. After the experimental samples return, the research team will deeply analyze the performance and structural changes of the battery samples, compare ground and on-orbit data, verify environmental compatibility, study performance degradation mechanisms, overcome challenges such as low space conversion efficiency and high irradiation attenuation, and develop efficient and reliable low-cost solar wing energy technology. 3. "Shenzhen Comprehensive Transportation '15th Five-Year Plan" (Draft for Comments) published for public comments Shenzhen Transportation Bureau published for public comments the "Shenzhen Comprehensive Transportation '15th Five-Year Plan" (Draft for Comments), proposing to build an internal and external transportation network, continue to consolidate the advantages of European and American ocean shipping routes, expand APEC regional and "Belt and Road" mutual sea routes. Deepen strategic cooperation with major shipping companies, vigorously develop water-to-water transit, automobile shipping, international transit consolidation and other businesses, expand domestic and near-ocean routes, promote the increase in domestic container volume, and by 2030, the port container throughput will reach 38 million TEUs. Future Market Analysis 1. Huaxi: The "Red May" primary uptrend continues, focusing on the dual trends of "technology + resources" Overseas, the capital market has fully priced in geopolitical risks, combined with expectations of a relaxation in US-China relations, weakening the external constraints on A-shares. On the fund side, post-holiday funds are entering the market at an accelerated pace, with margin balances hitting new highs for the year. The average stock price of the entire A-share market has broken through the year's high, reflecting the positive feedback effect of incremental funds entering the market, driving the market's upward trend. At the same time, the continuous appreciation of the Renminbi further enhances the attractiveness of Renminbi assets, helping to reduce the risk premium of the stock market and increase the valuation center. In terms of style, the global resonance of the AI technology industry is strengthening the logic of A-shares, and after the high growth in the AI chain exports and mutual confirmation of first quarter performance, the two major high-liquidity sectors of technology and resources in A-shares are further confirmed. 2. Guosen: Short-term market trends may experience periodic fluctuations after rapid rise Considering that the market has been rising continuously for over a month since March 23, with substantial gains accumulated in the previous period, and high trading congestion in hot sectors like AI hardware, short-term market trends may experience periodic fluctuations after rapid rises. No overheating signals have been seen yet, and with positive factors driving the market both domestically and internationally, the upward trend of the market remains unchanged. The medium-term technology theme remains unchanged, but there is no rush to make decisions. In the short term, the current high congestion in growth industries like communications may lead to periodic highs, while the heat in traditional value sectors like consumption has dropped to low levels, and future trends may spread to low-level sectors. 3. CITIC SEC: Policy multi-dimensional improvement, suggest focusing on the consumer medical sector for layout opportunities CITIC SEC's research report stated that recent policies have encouraged the development of consumer medical sectors from multi-dimensional perspectives. Looking at a comprehensive array of policy statements, CITIC SEC believes that the consumer medical track has a long slope and thick snow, with high potential demand and broad development space. At the same time, the current valuation of the consumer medical sector is at a bottom position in nearly five years. With the favorable policy direction and the recovery of business operations by enterprises, the sector's value in configuration is highlighted. In the first quarter of 2026, leading companies in the consumer medical sector demonstrated resilience in performance, and it is recommended to focus on opportunities for layout in the consumer medical sector. The consumer medical sector is at a turning point of marginal improvement, benefiting from positive policy directions and low valuations, with significant investment benefits and highlighted configuration value, maintaining a "stronger than the overall market" rating for the consumer medical industry. This article is republished from "Tencent Stock Selection". GMTEight editor: Liu Jiayin.