A-share Midday Review | ChiNext Index Falls 3.63%, Computing Power Hardware Plunges, Bank Stocks Buck the Trend and Strengthen

On October 29, the three major A-share indices opened collectively lower and then weakened unilaterally. The Shanghai Composite Index never turned positive from the open and closed at the morning session's low, with the market showing a divergent pattern of "broad index declines, weak rotation among themes, and counter-trend strength in heavyweight and high-dividend sectors." As of the midday close, the Shanghai Composite Index fell 0.93% to 3,647.12 points, the Shenzhen Component Index fell 2.55%, and the ChiNext Index fell 3.63%; the STAR 50 fell 4.21%. Across the Shanghai and Shenzhen markets, 809 stocks rose and 4,701 stocks fell. Half-day turnover in the Shanghai and Shenzhen markets was RMB986.7 billion, down RMB26.9 billion from the previous trading day. On the capital flow side, in the morning session main funds recorded net inflows into sectors including defense and military industry, railways and highways, and banking, while recording net outflows from electronics, semiconductors, and communications, among which the electronics sector saw net outflows exceeding RMB18 billion. Market Overview On the board, on the upside, the aerospace equipment sector rose 4.60%, ranking among the top industry gainers, while banking, insurance, and wind power equipment sectors strengthened against the trend; on the downside, components, semiconductors, electric motors, PCB concept, and communications equipment sectors led the declines. The satellite internet concept was locally active, with China Spacesat, Shanghai Hugong Electric Group, Aerosun Corporation, and Shanghai Geoharbour Construction Group Co., Ltd. hitting the daily limit, but the commercial aerospace sector index surged and then pulled back, turning negative by midday. The food processing sector edged up 0.12%, with Qingdao Foods posting a fourth consecutive limit-up and sealing at the limit today, while Zhongyin Babi Food and Shandong Huifa Foodstuff hit the daily limit. Overall, funds withdrew from sectors including electronics, semiconductors, and communications and rotated into high-dividend heavyweights such as aerospace and military, banking, and insurance as well as policy-beneficiary themes; decliners far outnumbered advancers, with the money-making effect concentrated in a few directions. Hot Sectors 1. Aerospace equipment sector among top gainers The aerospace equipment sector rose 4.60%, with CETC Lantian Technology up more than 13%, China Spacesat at the daily limit, China Aerospace Times Electronics up more than 6%, and China Satellite Communications, Hunan Aerospace Huanyu Communication Technology, and Shaanxi Zhongtian Rocket Technology up more than 4%; BeiJing StarNeto Technology fell more than 5%. Comment: On the capital flow side, Cailian Press market monitoring data showed that China Spacesat recorded net main-fund buying of more than RMB400 million, ranking first across the two markets, while Western Metal Materials and Hainan Drinda New Energy Technology ranked among the top in net main-fund inflows. 2. Bank stocks strengthen against the trend The banking sector rose 1.45%, with Industrial and Commercial Bank of China and China Construction Bank Corporation continuing to hit record highs, the total market capitalization of the four major state-owned banks exceeding RMB10 trillion, BQD up more than 7%, Bank Of Chengdu up more than 6%, Qilu Bank Co., Ltd. up more than 4%, and Zhejiang Shaoxing RuiFeng Rural Commercial Bank up more than 3%. Comment: On the news front, as of now 21 A-share listed banks have disclosed their 2026 interim dividend plans, with total proposed dividends exceeding RMB260 billion, of which the six major state-owned banks plan to pay approximately RMB220.989 billion, accounting for more than 80%; the interim dividend payout ratio of the six major banks was raised from 30% to 31%. On third-quarter results, BQD achieved operating revenue of RMB12.665 billion in the first three quarters, up 15.00% year on year, and net profit attributable to shareholders of RMB4.617 billion, up 15.67% year on year, maintaining double-digit growth for 15 consecutive reporting periods. 3. Wind power equipment sector rallies against the trend The wind power equipment sector rose 1.48%, with Titan Wind Energy touching the daily limit intraday and up more than 8% by midday, Jiangsu Haili Wind Power Equipment Technology up more than 8%, and Goldwind Science & Technology up more than 2%. Comment: On the news front, national electricity statistics for January-September released by the National Energy Administration on October 26 showed that nationwide newly grid-connected wind power capacity in January-September was 60.66 GW, of which 7.40 GW was added in September alone, up about 128% year on year; as of the end of September, cumulative nationwide wind power installed capacity was 700 GW, up 20.4% year on year. Separately, Cailian Press reported on October 29 that GWEC forecasts global new wind power installations will reach 178 GW in 2026, with a compound annual growth rate of 5.2% from 2026 to 2030. 4. AI animated short-drama concept repeatedly active The film and cinema sector rose 1.40%, with Cultural Investment Holdings quickly hitting the daily limit after the open, then opening the limit and resealing about 7 minutes later, recording four limit-ups in seven days; Hengdian Entertainment hit the daily limit, while Zhejiang Huazhi Digital Media, Omnijoi Media Corporation, and China Film Group rose more than 3%. Comment: On the news front, Nie Chenxi, chairman of the China Netcasting Services Association, previously wrote in an article that China's per-capita daily usage time of micro short dramas has reached 129 minutes, and the Hongguo Short Drama app has 168 million daily active users, exceeding the combined mobile daily active users of more than four major long-video platforms; in the first eight months of this year, a total of 430,000 micro short dramas were launched, 13 times the full-year total last year, of which AI-produced dramas accounted for more than 90%. 5. Computing power hardware sector plunges collectively The computing power hardware direction weakened sharply, with the components sector down 5.58%, the semiconductor sector down 4.31%, the PCB concept down 4.01%, and the communications equipment sector down 4.00%; Suzhou TFC Optical Communication fell nearly 19%, intraday approaching the 20% limit-down, Advanced Fiber Resources and Linktel Technologies fell more than 13%, Henan Shijia Photons Technology fell more than 11%, Avary Holding and Aoshikang Technology hit the limit-down, and Wus Printed Circuit fell nearly 9%. Comment: On the news front, Google parent Alphabet released its third-quarter earnings after the bell on October 28 local time, with capital expenditure of US$51.36 billion for the quarter, up 114% year on year, below market expectations of US$55.78 billion, and free cash flow of negative US$9.07 billion, negative for a second consecutive quarter; on the same day, Suzhou TFC Optical Communication disclosed its third-quarter report, with first-three-quarter operating revenue of RMB4.751 billion, up 21.25% year on year, and net profit attributable to shareholders of RMB2.083 billion, up 42.18% year on year, of which third-quarter operating revenue was RMB1.923 billion, up 31.50% year on year; the company's share price fell sharply after the earnings disclosure.