A-share Midday Review | Shanghai Composite Index Rises 0.16%; ICBC Hits New High; Banking and Defense Sectors Buck the Trend

On October 19, the three major A-share indices opened collectively lower. After a rapid initial decline, their trajectories diverged: the Shanghai Composite Index turned positive on the strength of heavyweight sectors such as banking, while the Shenzhen market's growth style remained under pressure. The market displayed a divergent pattern of "Shanghai strong, Shenzhen weak; heavyweights supporting the index; tech adjusting." As of the midday close, the Shanghai Composite Index rose 0.16% to 3,722.20 points, the Shenzhen Component Index fell 0.18% to 11,781.32 points, the ChiNext Index fell 1.07% to 2,742.70 points, and the STAR 50 fell 1.68%. More than 3,800 stocks in the Shanghai and Shenzhen markets declined, with 30 hitting the daily limit up and 10 hitting the daily limit down. Half-day turnover was 970.7 billion yuan, an increase of 8.1 billion yuan from the previous trading day. On the capital flow front, Cailian Press market monitoring data showed that in the morning session, main funds recorded net inflows into sectors including food and beverage, banking, and petroleum and petrochemicals, and net outflows from electronics, machinery and equipment, and pharmaceuticals, with the electronics sector seeing net outflows exceeding 5.9 billion yuan. Among individual stocks, Hengtong Optic-Electric topped net buying with over 1.1 billion yuan; Cambricon, Luxshare Precision Industry, and Kweichow Moutai ranked among the top in main-fund net inflows; Shanghai Xinhua Media saw net selling exceeding 900 million yuan; and CXMT Corporation, Victory Giant Technology, and Suzhou TFC Optical Communication ranked among the top in net capital outflows. Market Overview On the market, on the gainers' side, the banking sector strengthened against the trend, with Industrial and Commercial Bank of China hitting a new all-time high and reclaiming the title of A-share market capitalization leader; the defense sector was repeatedly active, with multiple stocks in the low-altitude economy concept hitting the daily limit up; the PCB concept bottomed out and rebounded intraday; and liquor and power edged higher. On the decliners' side, the CRO concept led losses with a 3.22% drop, while planting, semiconductors, real estate, components, media short dramas, CPO, and other sectors ranked among the biggest decliners. Overall, the Shanghai Composite Index turned positive on the strength of high-dividend heavyweight sectors such as banking, but more than 3,800 stocks in the Shanghai and Shenzhen markets declined, with only 30 hitting the daily limit up and 10 hitting the daily limit down, indicating a clear risk-averse character in capital flows, moving out of high-level tech sectors such as semiconductors and AI hardware and into defensive high-dividend sectors such as banking and food and beverage. Hot Sectors 1. Banking sector strengthens against the trend; Industrial and Commercial Bank of China hits a new all-time high The banking sector strengthened against the trend. Industrial and Commercial Bank of China rose more than 1.7% intraday to touch 8.63 yuan per share, and was up 1.65% at midday at 8.62 yuan, hitting a new all-time high, with combined A+H share market capitalization of approximately 3.02 trillion yuan, reclaiming the top spot in A-share market capitalization; BANKCOMM also hit a new all-time high in tandem, while Bank Of Suzhou, Agricultural Bank Of China, Bank of Ningbo, Bank Of Hangzhou, and Wuxi Rural Commercial Bank rose more than 2%. Commentary: On the news front, as of now, 21 A-share listed banks have disclosed their 2026 interim dividend plans, with total proposed dividends exceeding 260 billion yuan, and the payout ratios of the six major banks generally raised from 30% to 31%. Industrial and Commercial Bank of China's 2026 interim dividend implementation plan shows that the A-share record date is October 20 and the payment date is October 21; based on 356.406 billion ordinary shares, a cash dividend of 0.1511 yuan per share (tax included) will be paid, with total A-share cash dividends of approximately 40.738 billion yuan. The current 10-year Chinese government bond yield is about 1.68%, while the dividend yields of the banking sector are generally above 4%, giving dividends a clear spread advantage over government bonds and continuously enhancing their appeal to long-term capital such as insurance funds and social security funds. 2. Multiple stocks in the low-altitude economy concept hit the daily limit up; Shanghai Baolong Automotive Corporation and Beijing Jingcheng Machinery Electric post two consecutive limit-ups Multiple stocks in the low-altitude economy concept hit the daily limit up. Shanghai Baolong Automotive Corporation and Beijing Jingcheng Machinery Electric posted two consecutive limit-ups, both sealing at the limit up from the open. Harbin Dongan Auto Engine and Zhejiang Wanfeng Auto Wheel hit the daily limit up, while Zhejiang Jindun Fans, Xi'an ChenXi Aviation Technology Corp.,Ltd., Hwa Create Corporation, CITIC Offshore Helicopter, JZST, and others followed higher. It should be noted that the concept index was still down 0.73% at midday, presenting a pattern of "individual stocks at limit up, sector adjusting." Commentary: On the news front, on October 15 local time, Tesla unveiled the second-generation Roadster sports car at the SpaceX test site in Texas, USA. During the livestreamed launch event, the new model, using thrusters and high-power fans, completed maneuvers including driving up an inverted ramp, briefly going airborne, and spinning in the air, sparking market associations with flying cars and related technologies. Musk said the model is planned to enter production in 2028, with the thruster package version currently restricted to closed-course use, and the rocket version not yet approved for public road use. Catalyzed by this, the A-share low-altitude economy concept index rose 2.02% on October 16; individual stocks within the concept continued to be active today, but the concept index turned negative at midday. 3. Defense sector repeatedly active; North Navigation Control Technology touches the daily limit up The defense sector was repeatedly active. North Navigation Control Technology touched the daily limit up (limit-up price 13.08 yuan) and was up 7.91% at midday. Ocean's King Lighting Science & Technology, Guangdong Ganhua Science & Industry, and Changchun Yidong Clutch all posted two consecutive limit-ups, while Anhui Greatwall Military Industry, Jiangxi Guoke Defence Group, Aecc Aero Science And Technology, Cssc Offshore & Marine Engineering, AECC Aero-Engine Control, Jianglong Shipbuilding, North Long Dragon New Materials Tech, and others surged to follow higher. The ground armaments sector rose 4.38% in the half-day session, ranking first among industry sectors by gain. Commentary: On the news front, public-day tickets for the 16th China International Aviation and Aerospace Exhibition (Zhuhai Airshow) will go on sale from 12:00 on October 19 through officially designated online platforms. This year's airshow will be held in Zhuhai, Guangdong, from December 7 to 13, and for the first time will adopt a new all-domain viewing model of "one exhibition, three zones"the main exhibition area at the Zhuhai International Airshow Center, the Lianzhou unmanned equipment display zone, and the Gaolan maritime equipment display zone. The newly added Gaolan maritime equipment display zone will feature a large-scale concentrated showcase of active-duty naval equipment, and multiple types of main combat equipment of the air force will also make their debut. To date, nearly 50 countries and regions and more than 1,100 companies have confirmed participation, with over 3,000 pieces of equipment on display, about 10% of which will be first-time debuts, and more than 170 aircraft at the main exhibition areaall setting record highs. 4. PCB concept bottoms out and rebounds intraday The PCB concept bottomed out and rebounded during the session. Sihui Fuji Electronics Technology, Nanjing Comptech Composites Corporation, Jiangsu Xiehe Electronic, and Shenzhen WOTE Advanced Materials hit the daily limit up; Changzhou Aohong Electronics touched the daily limit up intraday (up 8.08% at midday); Ji'an Mankun Technology, Shengyi Technology, Shenzhen JLC Technology Group, Guangdong Champion, and others followed higher. On the news front, as of October 15, 16 A-share PCB concept stocks had released their 2026 third-quarter earnings forecasts, of which 14 pre-increased and 2 slightly increased, for a positive preannouncement rate of 100%. Coupled with the continued fermentation of industry-chain price increase news such as KB LAMINATES' multiple rounds of price adjustment letters during the year (the eighth round was issued on October 14, raising thin-cloth laminates and prepregs by 15%) and rising electronic cloth prices, as well as the continued prosperity of AI computing hardware demand, the PCB sector's earnings expectations are improving. It should be noted that the sector fell collectively with the AI hardware sector early in the session (hitting an intraday low of down 4.53%) and only showed a clear recovery near the midday close; the sector as a whole has still not turned positive (down 1.08% in the half-day session), presenting a pattern of "active individual stocks, divergent sector."