The trading volume of the two stock exchanges was less than RMB 1 trillion! Both the new consumption and pesticide sectors strengthened, with the high-profile stock clustering style resurging [Stock Market Closing Review]

The market experienced a day of volatile adjustments, with the ChiNext Index leading the losses. The total trading volume on the Shanghai and Shenzhen stock exchanges reached 998.9 billion yuan, a decrease of 11 billion yuan from the previous trading day. On the futures market, market hot topics were rather scattered, with the number of rising and falling stocks being roughly equal. In terms of sectors, pesticide and chemical stocks surged in the afternoon, with multiple stocks such as China Agri-United hitting the daily limit. New consumption stocks collectively strengthened, with the beverage and IP economy sectors leading the gains, and multiple stocks such as Juneyao Health hitting the daily limit. Pharmaceutical stocks also surged temporarily, with Hwasun Pharmaceutical hitting the daily limit. On the downside, robot concept stocks adjusted, with multiple stocks such as Lead Harmonic Drives falling more than 5%. By the close, the Shanghai Composite Index fell 0.18%, the Shenzhen Component Index fell 0.61%, and the ChiNext Index fell 0.68%.

Sector-wise

Among the sectors, new consumption concept stocks became active again, with food and beverage concept stocks leading the gains. Multiple stocks such as Kuaijishan, Quanyangquan, Jinfeng Liquor, Youyou Food, Jiaoda Angli, and Xiwang Food hit the daily limit.

Pacific Securities believes that consumption channels and habits for mass-market products have changed, with discount stores, snack variety stores, membership supermarkets, and other channels that offer cost-effectiveness, efficiency, and careful product selection becoming mainstream. According to disclosed data, both Mingming Henmang and Wanchen Group have reached 14,000 stores each. Meanwhile, Sam's Club plans to open eight new stores by 2025, bringing the total to 60, and expand into third-tier cities. Traditional supermarket chain Yonghui is also accelerating its restructuring and transformation. From a category perspective, emotional consumption, cost-effectiveness, and health have gradually become key factors for the success of major products. Kuaijishan has launched rice wine sparkling water, while Bairun shares have introduced a new cost-effective blended whisky product to meet the low-alcohol and low-threshold drinking needs of young consumers. Therefore, more attention should be paid to new consumption stocks or segments such as snacks, new beverages, and health concepts in the future.

Pesticide stocks surged rapidly in the afternoon, with multiple stocks such as Sinoflag, Hailir, Guangxin Agrochemical, Lier Chemical, and Meibang shares hitting the daily limit. On the news front, an explosion occurred in a workshop of Shandong Gaomi Youdao Chemical, drawing market attention to substitute enterprises for pesticide products led by chlorantraniliprole.

In a recent research report, Kaiyuan Chemical stated that disruptions in overseas glyphosate capacity supply, coupled with anti-cut-throat competition efforts in the domestic glyphosate industry, will help improve the competitive landscape and enhance the market share of leading companies. This is expected to strengthen the bargaining power of glyphosate producers in the industry chain and improve their sustained profitability. Additionally, after a prolonged period of consolidation, glyphosate stocks have shown obvious valuation advantages, which can also be seen as an attempt by funds to rotate between high and low valuations amid hot topic rotations. However, after the collective surge, there may be some differentiation, with a focus on active front-runners with good trends.

Individual Stocks Perspective

In terms of individual stocks, short-term sentiment continued to improve today, with all 10 consecutive limit-up stocks from the previous trading session closing in the green, boasting an impressive 80% advancement rate. Additionally, previously popular stocks such as Three Gorges A, Zhongchao Holdings, Suzhou Longjie, and Youfu Co. also attracted capital inflows and hit the limit-up. Currently, the clustering of high-momentum stocks has played a positive role in boosting overall market sentiment and partially improved the sustainability of hot themes. However, the broader market has yet to stop falling and stabilize, and at the current level, there isn't sufficient incremental capital to absorb these high-momentum stocks. Should the clustering loosen further, it could lead to a second wave of short-term sentiment ebbing.

Another point to note is the persistent weakness in some tech heavyweights recently. For instance, Cambricon dropped over 5% today, while Xinyisheng, Huadian Power, Sanhua Intelligent Control, and Zhongji Innolight also showed signs of high-volume declines. As traditionally high-beta sectors, tech stocks serve as a barometer for market sentiment. For the market to genuinely strengthen, tech stocks may remain an unavoidable direction during any rebound.

Market Outlook

The market adjusted with volatility throughout the day, with the three major indices closing slightly lower again, and the total trading volume falling below 100 billion. From an index perspective, if the market fails to reclaim the 5-day moving average, the short-term outlook remains a downward consolidation structure. However, from a thematic speculation angle, short-term market activity persists. High-momentum stocks in recent hot themes like controlled nuclear fusion, new consumption, and innovative pharmaceuticals mostly maintained favorable profit effects, validating the view that "structural opportunities still exist in the short-term market under capital clustering." Yet, it's worth noting that these themes have accumulated significant profit-taking pressure after repeated plays. Should short-term sentiment weaken again due to prolonged index adjustments, caution is warranted against potential further declines in high-momentum clustered stocks.

Market Highlights

1. State Council Anti-Monopoly and Anti-Unfair Competition Committee Expert Advisory Group Holds Meeting: Comprehensive Crackdown on "Cut-Throat Competition"

Caixin, May 27 — The plenary meeting of the State Council Anti-Monopoly and Anti-Unfair Competition Committee Expert Advisory Group was held in Beijing. Meng Yang, member of the Party Leadership Group and Deputy Director of the State Administration for Market Regulation, attended and delivered a speech. Luo Wen, Secretary of the Party Leadership Group, Director of the State Administration for Market Regulation, and Deputy Director of the Committee, emphasized that the expert advisory group must firmly adhere to the correct political direction, focus on new challenges in fair competition governance, conduct forward-looking and targeted research, provide robust support for the Committee's decision-making, and contribute to building a unified national market and promoting high-quality development. The meeting emphasized the need to closely focus on the work arrangements of the committee, and key tasks such as accelerating the construction of a unified national market, comprehensively addressing "cut-throat competition", and strengthening competition supervision and law enforcement. It urged active commitment and proactive action to better fulfill the responsibilities of the expert advisory group and contribute wisdom and strength to enhancing the capacity for fair competition governance and maintaining a fair and competitive market order. Wang Tiehan, the Anti-Monopoly Commissioner of the State Administration for Market Regulation, chaired the meeting.

2. Several wealth management subsidiaries of banks are applying to join the Insurance Asset Management Association of China

Cailian Press, May 27 - Cailian Press reporters have confirmed from multiple sources that several wealth management subsidiaries of banks are currently applying for membership in the Insurance Asset Management Association of China, and some institutions have already completed the membership application process. Several executives from wealth management subsidiaries revealed to reporters that, as planned, all wealth management subsidiaries of banks will join the Insurance Asset Management Association of China. Subsequently, the Insurance Asset Management Association of China is expected to be renamed, becoming an industry self-regulatory organization covering the entire banking and insurance asset management industry.