All three major indexes returned to positive territory in the afternoon! Computing power hardware sector strengthened across the board, with WUS Printed Circuit (Kunshan) Co., Ltd. hitting the daily limit, a rare occurrence [Stock Market Review]

The market bottomed out and rebounded, with the three major indices rising slightly. The total trading volume of the Shanghai and Shenzhen markets was 119 billion yuan, a decrease of 16.1 billion yuan from the previous trading day. In the futures market, the hot topics were rather mixed, with more stocks falling than rising, over 3,400 stocks across the entire market declined. In terms of sectors, computing power hardware stocks strengthened again, with multiple stocks including Huadian reaching the daily limit. Defense stocks fluctuated upward, with Beifang Changlong hitting a 20% daily limit. AI glasses concept stocks remained active, with Biyi Co. reaching the daily limit. On the downside, rare earth permanent magnets concept stocks fluctuated downward, with Zhongke Magnet dropping by more than 10%. At the close, the Shanghai Composite Index rose 0.04%, the Shenzhen Component Index rose 0.24%, and the ChiNext Index rose 0.23%.

In terms of sectors

Sectors-wise, all computing power-related directions such as PCBs strengthened, with Yihao New Materials, Kexiang Co., Zhongjing Electronics, and Huadian Co. reaching the daily limit, while Zecheng Electronics, Shengyi Electronics, and Zhongfu Circuit saw significant gains.

Zhaoxin Electronics believes that against the backdrop of robust global demand for computing power, accelerated technological progress will keep the supply of high-end PCB capacity tight in the medium and long-term. This round of AI-driven technological innovation cycle will last longer and generate broader market demand. Short-term overseas CSP producers' AI-Capex exceeding expectations has dispelled doubts about the beta of the computing power industry. Subsequently, wider applications of large AI models will continue to drive up the demand for high-layer and high-order HDI. The domestic PCB industry is continuously upgrading and accelerating the expansion of mid-to-high-end capacity, as well as laying out overseas capacity, with performance releases showing sustainability and flexibility.

From a market perspective, the computing power hardware sector has recently shown strong continuity, with core targets such as Xinyisheng, Shenghong Technology, and Huadian Co. maintaining an upward trend despite fluctuations. When other hot topics entered adjustments, this direction attracted more capital inflows. However, based on past experience, in a zero-sum game environment, if the sector's weight suddenly accelerates, it may raise concerns about a rapid peak. Additionally, compared to the previous small declines and rises, the short-term volatility of related stocks might intensify.

Moreover, consumer electronics represented by AI glasses also rebounded, with Qingyue Technology, Biyi Co., and Zhongjing Electronics reaching the daily limit, and Zhuoyi Technology, HC SemiTek, and Victory Precision among the top gainers. News-wise, Meta officially announced a collaboration with sports brand Oakley to launch a new AI glasses model - Meta Oakley. It is reported that Oakley, like Ray-Ban, is a subsidiary of the eyewear giant EssilorLuxottica.

Founder Securities released a research report stating that AI smart glasses, as the best carrier for AI application implementation, are driving the iteration and upgrade of smart wearable devices. Global sales are projected to reach 5.5 million units in 2025 (YoY +135%), and by 2035, the market penetration rate is expected to reach 70%. Subsequently, attention can be paid to three major directions in the industry chain: 1) The upstream segment mainly consists of specialized manufacturers of optical lenses, frame components, and core components; 2) The midstream includes ODM/OEM toll processing producers and brand producers; 3) The downstream primarily focuses on applications in commercial and consumer scenarios.

In the consumer electronics sector, after a long period of consolidation, the industry's congestion has significantly decreased, and valuation advantages have started to emerge. If the overall positive feedback of funds in the sector can continue, it is likely to attract more active funds into the market, at which point some lagging catch-up opportunities within the sector may still be worth watching.

Regarding individual stocks,

today, the overall market's profit effect showed a polarized trend. Technology stocks received accelerated inflows of funds, with core PCB stock Huadian Corporation hitting a rare limit up, while Shengyi Electronics and Shenghong Technology continued to set new historical highs. The newly listed popular stock Insta360 also achieved a 20CM limit up, with its market value exceeding 80 billion yuan. Although there was some internal differentiation within the oil and gas and stablecoin sectors, the front-line core stocks generally provided positive feedback, with all five of yesterday's three-consecutive-board stocks successfully advancing. On the other hand, the decline of some high-profile stocks continued, with pharmaceutical innovator Guangshengtang falling over 10%, Lianhua Technology hitting the limit down, and in the rare earth permanent magnets sector, Zhongke Magnet fell over 12%, Ningbo Yunsheng and others hit the limit down, and North Mining Science & Technology even experienced an A-shaped sell-off. Overall, in an environment of existing capital competition, the style of trading from high to low may continue, and one should still be wary of the risk of further declines in other high-profile stocks.

Market outlook,

today, the market bottomed out and rebounded, with all three indices closing in the green. From the index perspective, the Shanghai Composite Index has shown lower shadows for two consecutive days, indicating strong support near the 30-day moving average. However, on the other hand, trading volume continues to shrink, with today's turnover in the Shanghai and Shenzhen markets falling below 1.2 trillion yuan, reflecting that market sentiment is mainly in a wait-and-see mode, awaiting a directional choice from the subsequent indices. In terms of the futures market, the rotation situation continues, with computing hardware and consumer electronics becoming today's market hotspots. These technology sectors themselves have high levels of attention, and if they can continue to strengthen and spread across the entire tech stock spectrum in the future, it could be beneficial for the recovery of market sentiment. Conversely, if the subsequent market feedback is poor, short-term bullish confidence may be hit again, and at that time, a more cautious approach should be taken, waiting for the market to determine a clearer leading core before following suit.

Market News Highlights

1. CSRC: Raises the criteria for removing the special identifier "U" from newly registered unprofitable technology companies on the Science and Technology Innovation Board (STAR Market). The capital threshold for investors to invest in the growth tier of the STAR Market remains unchanged.

Caixin reported on June 18, "What targeted measures are there in the 'Opinions on Establishing a Science and Technology Innovation Growth Tier on the STAR Market to Enhance Institutional Inclusiveness and Adaptability' regarding strengthening investor protection?" In response, a spokesperson for the China Securities Regulatory Commission (CSRC) stated that technological innovation is a process of exploring the unknown, which not only nurtures new momentum but also inevitably involves risks. While vigorously supporting the innovative development of technology companies, this reform further strengthens the protection of the legitimate rights and interests of small and medium-sized investors. On one hand, it focuses on risk disclosure and investor protection, making multiple targeted institutional arrangements. These include: uniformly setting a special identifier "U" after the stock abbreviations of companies in the Science and Technology Innovation Growth Tier; raising the criteria for newly registered unprofitable technology companies to remove the special identifier "U"; requiring companies to regularly disclose the reasons and impacts of their unprofitability and provide risk warnings; requiring securities firms to strengthen investor risk assessments from multiple dimensions and fully inform them of risks; organizing individual investors to sign a special risk disclosure document for investing in stocks of companies in the Science and Technology Innovation Growth Tier, and so on. On the other hand, it emphasizes simplicity and clarity to enhance investors' sense of gain. These include: maintaining unchanged basic systems such as issuance and listing; keeping unchanged the conditions for existing unprofitable companies to remove the "U" identifier; and keeping unchanged the capital threshold for investors to invest in the growth tier of the STAR Market.

2. CSRC: Restarts the listing of unprofitable companies under the fifth set of criteria on the STAR Market, expands the scope of application, and supports more enterprises in cutting-edge technology fields such as artificial intelligence, commercial aerospace, and the low-altitude economy to apply for listing under criteria F.

Caixin reported on June 18 that the CSRC issued the "Opinions on Establishing a Science and Technology Innovation Growth Tier on the STAR Market to Enhance Institutional Inclusiveness and Adaptability." Building on the continuous implementation of the "Eight Measures for the STAR Market," the Opinions take the establishment of a specialized tier as a starting point, restart the listing of unprofitable companies under the fifth set of criteria on the STAR Market, and introduce a package of more inclusive and adaptive institutional reforms, aiming to address bottlenecks and difficulties in supporting the development of high-quality technology companies, while further strengthening the protection of investors' legitimate rights and interests. On one hand, it establishes the Science and Technology Innovation Growth Tier on the STAR Market, clarifying specific requirements in terms of the tier's positioning, conditions for companies to enter and exit the tier, strengthening information disclosure and risk disclosure, and enhancing investor suitability management. On the other hand, it introduces six reform measures centered around enhancing institutional inclusiveness and adaptability for high-quality technology companies, mainly including: firstly, piloting the introduction of a system for senior professional institutional investors for companies applying for listing under the fifth set of criteria on the STAR Market. Second, we will pilot a pre-IPO review mechanism for high-quality technology-based enterprises to further enhance the quality and efficiency of pre-communication services provided by stock exchanges. Third, we will expand the scope of application of the fifth set of criteria to support more enterprises in cutting-edge technology fields, such as artificial intelligence, commercial aerospace, and the low-altitude economy. Fourth, we will support technology-based enterprises under review that have yet to turn a profit to carry out activities such as capital increases and share expansions targeted at existing shareholders. Fifth, we will improve the institutional mechanisms supporting the development of publicly listed firms on the Science and Technology Innovation Board. Sixth, we will enhance the market functions of the Science and Technology Innovation Board that coordinate investment and financing.