A-shares market rises with decreasing volume; institutions recommend focusing on two main themes

On April 7, the A-share market rebounded on shrinking trading volume. Multiple sectors—including rare earths, coal, the pig industry, and phosphate chemical industry—were active. The Science and Technology Innovation Composite Index rose by nearly 1%. Across the entire A-share market, nearly 4,000 stocks rose, with more than 100 hitting the daily limit-up. Trading turnover shrank, with trading value at 1.62 trillion yuan. On the capital flows side, market sentiment remained cautious: main fund net outflows in both Shanghai and Shenzhen exceeded 13 billion yuan, and main fund net outflows in the CSI 300 exceeded 5 billion yuan.

Analysts believe that before external uncertainty is resolved, the market is still in a period of consolidation. Late April will be a key time window for marginal improvements in the domestic and international environment. After external shocks fade, in mid-to-late April the market’s focus will shift toward areas with high growth in the first-quarter reports. Focus on the growth and energy main lines.

More than 100 stocks hit limit-up

On April 7, the A-share market rebounded on shrinking trading volume. By the close, the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, and Science and Technology Innovation Composite Index rose by 0.26%, 0.36%, 0.36%, and 0.85%, respectively. The Beijing Stock Exchange 50 Index fell by 0.34%, and the Shanghai Composite Index closed at 3,890.16 points.

Small-cap stocks performed actively. The large-cap concentrated Shanghai 50 Index and CSI 300 Index fell by 0.07 points and 0.17 points, respectively. The CSI 1000 Index and CSI 2000 Index, which concentrate small-cap stocks, rose by 0.92% and 1.37%, respectively, while the Wind small-cap stock index rose by 3.01%.

Trading value in the A-share market edged down on slightly reduced volume, with trading value at 1.62 trillion yuan, down 45.3 billion yuan from the previous trading day. Of that, the Shanghai market’s trading value was 16.2k yuan, and the Shenzhen market’s trading value was 16.2k yuan. In the entire A-share market, 3,977 stocks rose, 101 stocks hit the daily limit-up, 1,426 stocks fell, and 18 stocks hit the daily limit-down.

From the market’s trading snapshot, sectors such as rare earths, coal, the pig industry, and phosphate chemical industries were active. Sectors such as generic pharmaceuticals, banks, and consumption-related businesses saw pullbacks. Among Shenwan Level-1 industries, basic chemicals, petroleum and petrochemicals, and coal led the gains, rising by 3.66%, 2.85%, and 2.44%, respectively. Banks, food and beverage, and auto industries led the declines, falling by 0.94%, 0.52%, and 0.44%, respectively.

Among the leading basic chemicals sector, Lingwei Technology, Jiangtian Chemical, and Dongyue Silicone Materials all hit 20% daily limit-up. Longhua New Materials rose more than 11%, Guangkang Biochemical rose more than 10%, and more than 20 stocks including Xinghua Shares, Chitianhua, Yabang Shares, and Youfu Shares all hit limit-up. Among them, Dongyue Silicone Materials said in a first-quarter performance pre-announcement released on the evening of April 3 that it expects a significant increase in performance in Q1 2026. The net profit attributable to shareholders of listed companies is expected to be between 183 million yuan and 203 million yuan, representing a year-on-year increase of 397.02% to 451.34%.

In the petroleum and petrochemicals sector, Hengyi Petrochemical, Heshun Petroleum, and Qixiang Tengda hit limit-up, while Guanghui Energy rose by more than 8%.

In addition, in the electronics sector, Tongyu New Materials hit a 20% limit-up. Zhongying Technology rose by more than 14%. Furong Technology, Kangqiang Electronics, Shenzhen Huacheng, and Hongchang Electronics all hit limit-up. Cambricon rose by more than 9%.

Jin Yiteng, chief chemical analyst at Open Source Securities, said that in the short term, geopolitical conflict has intensified, and overseas orders may shift to domestic markets, which could boost domestic demand for chemical products and drive up chemical product prices. Looking at the medium to long term, if global crude oil supply becomes normal in the future, the restart and resumption of production of overseas affected facilities will also take time. Globally, there could be at least one round of replenishment demand for chemical products. We are optimistic that China’s chemical assets will see a reassessment of value.

Capital sentiment remains cautious

From the capital flows perspective, as the market has continued to fluctuate in recent days, capital sentiment has stayed cautious. On April 7, main fund net outflows from both Shanghai and Shenzhen exceeded 13 billion yuan.

Specifically, according to Wind data, on April 7 main fund net outflows from both Shanghai and Shenzhen were 723.91B yuan, marking net outflows for three consecutive trading days. Among them, main fund net outflows in the CSI 300 were 890.49B yuan. The number of stocks with main fund net inflows in both Shanghai and Shenzhen was 1,937, while the number of stocks with main fund net outflows was 3,244.

In terms of industry sectors, on April 7, among Shenwan Level-1 industries, 10 industries saw main fund net inflows. Basic chemicals, building decoration, and public utilities had the top main fund net inflow amounts, at 13.82B yuan, 873 million yuan, and 516 million yuan, respectively. Among 21 industries that saw main fund net outflows, power equipment, communications, and computer industries had the top net outflow amounts, with net outflows of 5.95B yuan, 1.25B yuan, and 3.44B yuan, respectively.

At the individual stock level, on April 7, stocks such as Wulan Lithium, JCI Xuchuang, GCL Energy, Tongding Internet, and Shenzhen Huacheng had the top main fund net inflow amounts, at 727 million yuan, 721 million yuan, 637 million yuan, 577 million yuan, and 505 million yuan, respectively. XinSAG Wind Power, Tianfu Communication, CATL, Tongyu Communication, and Go-vision Technology had the top main fund net outflow amounts, at 2.97B yuan, 2.33B yuan, 650 million yuan, 645 million yuan, and 613 million yuan, respectively.

The market is still in a consolidation period

For the A-share market, Zhang Xia, chief strategy analyst at China Merchants Securities, said that external risks facing the A-share market have not been substantively alleviated, and there is a risk that the conflict between the US and Iran could escalate beyond expectations. Against this backdrop, further upside pressure on oil prices will intensify concerns about global economic stagflation. Late April will be a key time window for marginal improvement in the domestic and international environment. After external shocks dissipate, in mid-to-late April, the market’s focus will shift to areas with high growth in first-quarter report performance. Based on current data, resource sectors such as nonferrous metals and petroleum and petrochemicals, as well as new energy, optical communication, and the semiconductor industry chain, are expected to become the industries with the most notable earnings growth rates.

Li Yanzheng, fund manager at Furong Fund, said that in terms of market unfolding, investors are still waiting for clarity on key nodes in the US-Iran conflict. The US-Iran conflict has not shaken the core logic underpinning the A-share market’s domestic policy efforts and the AI innovation wave. In the short term, the market remains in a high-volatility range, so it is advised to maintain patience.

“Until external uncertainty is resolved, the market remains in a consolidation period.” He Kang, chief strategy analyst at the Research Institute of Haitai Securities, said that on the style front, large-cap value may still be relatively advantaged in the short term, but the value-for-growth ratio of growth stocks has improved somewhat. After risk appetite stabilizes and recovers, it may gradually return to growth.

“Looking at the short term, compared with last year’s bottoming pattern that saw a ‘V-shaped reversal,’ there are still differences.” Liu Chenming, chief strategy analyst at GF Securities, said that the current geopolitical situation still carries uncertainty. During the earlier market decline, it was not obvious that trading volume expanded significantly. The market is expected to require some time to shake out and bottom out in order to fully digest sentiment and rotate trades.

Regarding market allocation, He Kang said that at the industry level, in the short term it is recommended to control position sizes, leave room for flexibility, and maintain defensive and low-correlation allocations such as dividends, some oversold AI computing power, and innovative drugs. In the medium term, allocations should be made on dips around two main themes: the power supply chain (including lithium battery materials, power equipment, and power operators, etc.) and the two leading cues of improving industry conditions.

Li Yanzheng suggested focusing on two main themes: first, the growth theme—pay special attention to AI computing power and applications, semiconductors, and related directions; second, the energy theme—focus on investment opportunities driven by substitution from new energy.