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This week, the market showed a strong consolidation trend, with a clear pattern of strength in the Shenzhen market and weakness in the Shanghai market. The Shanghai Composite Index declined by 0.70% over the week, the Shenzhen Component Index rose by 0.76%, the ChiNext Index increased by 2.51%, the CSI 300 Index gained 0.19%, and the STAR 50 Index fell by 2.88%.

For next week’s market, industry insiders believe that recent geopolitical conflicts have caused significant volatility in global financial markets. Investors should pay attention to news developments and continue monitoring sectors such as infrastructure, electrical equipment, and banking.

Market Shows Strength in Shenzhen, Weakness in Shanghai

This week, influenced by geopolitical conflicts and other factors, the market exhibited a strong consolidation trend, with a noticeable pattern of Shenzhen outperforming Shanghai. The Shanghai Composite Index closed at 4,095.45 points, down 0.70%; the Shenzhen Component Index closed at 14,280.78 points, up 0.76%. Notably, the ChiNext Index increased by 2.51% this week.

According to data from Tonghuashun, among the top ten constituents of the ChiNext Index by weekly gains are Yingke Medical, Hunan Youneng, Sunshine Power, Jinneng Technology, EVE Energy, CATL, Shengbang Co., Xinwangda, Dindong Co., and Putailai. Yingke Medical and Hunan Youneng each gained over 20% this week. The biggest declines were seen in Runze Technology, BlueFocus, Zhinan, Koma Technology, Xinwei Communications, Xingchen Technology, Sanhuan Group, Tred, Jingce Electronic, and Guangxian Media.

Recently, external financial markets have continued to fluctuate. From Tuesday to Thursday, the Dow Jones Industrial Average closed lower for three consecutive days. On the news front, with the continued closure of the Strait of Hormuz, international crude oil prices surged on Thursday, with Brent crude oil surpassing $100 per barrel for the first time since August 2022.

Rapid Sector Rotation

Looking at sector performance (Shenwan Level 1 industries) this week, sectors such as coal, electrical equipment, construction decoration, utilities, and banking led the gains, while defense military, oil and petrochemicals, non-ferrous metals, media, and machinery equipment lagged. In terms of concepts, lithium mining, sodium batteries, and fertilizer concepts led the gains, while military trade, combustible ice, and shale gas sectors performed relatively weakly.

It is worth noting that the electrical equipment sector rose nearly 5% this week, with 13 stocks gaining over 20%, including Shouhang New Energy, Tongyu Heavy Industry, Ailuo Energy, Shuangyi Technology, Daikin Heavy Industry, Hunan Youneng, Penghui Energy, Putailai, Xihua Technology, Southern Power Grid Technology, Hengdian DMEGC, Jixin Technology, and Haike New Source.

Shanxi Securities analyst Xiao Suo believes that recently, “The 109 major projects announced under the ‘14th Five-Year Plan’ include green hydrogen as a key new industry for development. The new energy system construction involves seven major projects: large hydropower and water-wind-solar integrated bases, ‘Shagehuang’ new energy bases, offshore wind farms, coastal nuclear power, power transmission channels, power interconnection projects, and natural gas pipelines.”

Industry insiders believe that digital and computing collaboration, as a national-level new infrastructure project, addresses the mismatch of energy and computing power in space and time, creating significant investment opportunities in core sectors such as electrical equipment, smart dispatching software, energy storage, and project operations. This promotes a reevaluation of related industry values and is a key driver for the deep integration of digital economy and energy transformation.

The reporter notes that while some emerging sectors are active, sectors such as non-ferrous metals, oil, computing leasing, and cloud computing, which had previously surged, have experienced significant adjustments.

Pay Attention to News Developments

For next week’s market, industry insiders suggest that investors should focus on news developments.

CITIC Securities’ research report states that the green fuel industry is crucial for national energy security. It is positioned as a substitute for oil and gas, transforming from an optional decarbonization track into a rigid national strategy with clear growth potential. The valuation premium for oil substitutes and national energy security will drive a fundamental restructuring of the wind power industry’s underlying logic.

CICC notes that the global shipping industry, driven by policy or spontaneous decarbonization trends, is expected to continue strengthening. Meanwhile, China’s development of green fuels like green methanol will help promote non-electric utilization of new energy sources and ensure energy security. Investors are optimistic about companies capable of leading green methanol capacity construction, deployment, and securing orders, especially in new energy equipment and green power operation sectors.

HuaXin Securities analysts told Dazhong Securities News that “Next week, investors should pay close attention to news developments, especially geopolitical conflicts. Given the rapid sector rotation this week, trading becomes more challenging. Investors should control their positions, avoid blindly chasing gains, and focus more on the performance of listed companies. In terms of sectors, continue to monitor infrastructure, electrical equipment, and banking sectors.”