On April 1st, all three major A-share indices rose across the board.

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● Staff Reporter Wu Yuhua

April 1st marks the first trading day of April and the second quarter, with all three major indices of the A-share market rising across the board. The CRO, innovative drugs, optical modules, optical chips, and other sectors performed actively, with the ChiNext Index up nearly 2%. Nearly 4,500 stocks in the entire A-share market rose, with over 60 stocks hitting the daily limit. Market trading volume slightly increased, with a total turnover of 2.02 trillion yuan. In terms of capital, market sentiment warmed up, with net inflows of over 7 billion yuan from main funds in Shanghai and Shenzhen markets, and net inflows of over 3 billion yuan in the CSI 300 main funds.

Analysts believe that the market is expected to fluctuate upward in the short term, but the rebound will not happen overnight; sustained increase in trading volume is needed as support. In the medium term, Chinese assets are internally stable and likely to attract continuous capital inflows. In April, focus should be on adjusting allocation structures, and opportunities with medium-term growth prospects and earnings certainty should be sought amid uncertainties.

Nearly 4,500 stocks rose

On April 1st, the three major indices of the A-share market opened higher and then fluctuated. The Shanghai Composite Index and Shenzhen Component Index both opened up over 1%, while the ChiNext Index opened up over 2%. By the close, the Shanghai Index rose 1.46%, the Shenzhen Index 1.70%, the ChiNext Index 1.96%, the STAR Market Composite Index 3.44%, and the Beijing 50 Index 2.39%. The Shanghai Index closed at 3,948.55 points.

Large and small-cap stocks advanced together, with the Shanghai 50 Index and CSI 300 Index, which are concentrated in large-cap stocks, rising 1.86% and 1.71%, respectively. Small-cap indices like the CSI 1000, CSI 2000, and Wind Micro-cap Index increased by 1.89%, 2.06%, and 1.03%, respectively.

Market trading volume increased slightly, with a total turnover of 2.02 trillion yuan, up 20.2k yuan from the previous trading day. The Shanghai market’s turnover was 20.2k yuan, and the Shenzhen market’s was 18.9B yuan. A total of 4,495 stocks rose, with 65 hitting the daily limit, while 887 stocks declined, with 14 hitting the limit down.

From the market perspective, sectors such as CRO, innovative drugs, optical modules, and optical chips performed actively, while sectors like high dividend, water electricity, and lithium mining experienced adjustments. Among the primary industries of Shenwan, pharmaceuticals and biologicals, communications, and media led the gains, rising 3.99%, 3.36%, and 2.94%, respectively. Electronics, beauty care, and machinery also rose over 2%. Only utilities, coal, and petroleum and petrochemicals declined, with decreases of 0.52%, 0.19%, and 0.13%.

In the leading pharmaceutical and biological sector, stocks like Linuo Medicine, Aidi Pharmaceutical, Guangshengtang, and Ruizhi Medicine all hit the 20% daily limit. Huiyu Pharmaceutical-W rose over 17%, Yifang Bio-U over 16%, Chengda Pharmaceutical over 15%, and multiple stocks such as Yibai Pharmaceutical (rights protection), Peking University Medical, Rundu Shares, AngliKang, Ji’an Medical, and Kailai Ying also hit the limit.

Regarding the reasons for the market rebound, Cheng Liang, fund manager of 33 Degrees Capital, said that the easing of geopolitical risks; the central bank’s indication to continue implementing moderately loose monetary policy to maintain ample liquidity; the better-than-expected earnings of leading pharmaceutical stocks; accelerated overseas expansion of innovative drugs, which boosted investor sentiment; and market sentiment’s partial recovery, with funds flowing back from high-position sectors to quality sectors at lower levels, all contributed to the positive trend.

Market sentiment warms up

From the capital perspective, on the first trading day of April, market sentiment improved, with net inflows of over 7 billion yuan from main funds in Shanghai and Shenzhen, reversing a net outflow of 493.60 billion yuan on the previous day. The net inflow of main funds into the CSI 300 was over 3 billion yuan, compared to a net outflow of 49.36B yuan the day before.

Specifically, according to Wind data, on April 1st, the net inflow of main funds in Shanghai and Shenzhen markets was 15.15B yuan, with 7.19B yuan flowing into the CSI 300. A total of 2,545 stocks saw net inflows of main funds, while 2,637 stocks experienced net outflows.

In terms of industry sectors, 18 primary industries of Shenwan saw net inflows of main funds on April 1st. The sectors with the largest net inflows were communications, pharmaceuticals and biologicals, and electronics, with 3.43B, 5.03B, and 4.1B yuan, respectively. Conversely, 13 sectors experienced net outflows, with power equipment, basic chemicals, and automobiles leading, with outflows of 2.59B, 5.58B, and 1.73B yuan.

In individual stocks, on April 1st, stocks like Tianfu Communications, Zhongji Xuchuang, Xin Yisheng, GCL Energy Technology, and China Merchants Shipbuilding had the largest net inflows of main funds, at 1.34B, 1.133 billion, 753 million, 731 million, and 587 million yuan, respectively. Stocks like Sunshine Power, BYD, Demingli, EVE Energy (rights protection), and Pingtan Development had the largest net outflows, at 1.36B, 1.13B, 817 million, 686 million, and 616 million yuan. Notably, communication stocks such as Tianfu Communications and Zhongji Xuchuang received significant capital inflows.

Focus on earnings certainty

Wind data shows that as of April 1st, the rolling P/E ratio of Wind All A was 22.86 times, and the CSI 300’s was 14.12 times.

Regarding the A-share market, Li Lifeng, Deputy Director of Huaxi Securities Research Institute and Chief Strategy Analyst, said that since the recent overseas geopolitical conflicts, RMB assets have demonstrated resilience in the global market. Until geopolitical tensions clarify and oil supply recovers, investor risk appetite is unlikely to improve fundamentally. The focus should be on the development of geopolitical situations and whether trading volume in the stock market increases.

“Currently, the market is oscillating around geopolitical conflicts, and the main indices have not yet decoupled from geopolitical factors and oil prices. Oil prices remain a core indicator affecting asset performance,” said Chen Gang, Chief Strategy Analyst at Dongwu Securities. He predicted that the overall pattern might show a “back-and-forth, tug-of-war” with intermittent negotiations, and market sentiment will fluctuate accordingly.

Cheng Liang believes that the market is expected to fluctuate upward in the short term, but the rebound will not be immediate; sustained volume growth is necessary. A slow upward trend is possible in the medium term, supported by weak economic recovery and policy backing, with valuation likely to recover over time.

“In the medium term, Chinese assets are internally stable and likely to attract ongoing capital inflows,” said Zhang Yusheng, Chief Strategy Analyst at Everbright Securities. He pointed out three potential market turning points in April: first, better-than-expected earnings reports from listed companies, which could support market growth; second, the entry of medium- and long-term funds, as policies continue to favor their inflow, potentially triggering market bottoming and rebound; third, easing external risks, which is one of the most direct potential drivers for market gains, though its predictability is limited.

Regarding market allocation, Chen Gang emphasized that April should focus on adjusting allocation structures, avoiding sectors with high valuations and long earnings realization cycles, and seeking opportunities with medium-term growth and earnings certainty amid uncertainties. High-quality stocks are more likely to generate excess returns, so a focus on leading stocks is recommended.

Yusheng Zhang suggested paying attention to industries that could benefit from rising commodity prices, including resource products, essential consumer goods, hard technology, and sectors related to government investment. Additionally, industries with high growth in annual reports and first-quarter reports, mainly resource and technology sectors, are worth close watch.