April's strong start! The Sci-Tech Innovation 50 index surges over 3%, with two main themes igniting the A-share market.

Why has the pharmaceutical sector become the leading driver of the April market rally?

Key points of the full text: On the first trading day of April, A-shares surged with increased volume across the board, with the Sci-Tech Innovation 50 up over 3%. Both pharmaceuticals and computing hardware drove the rally; in the short term, markets are consolidating, while the medium- to long-term slow bull trend remains unchanged, focusing on two main themes: earnings certainty and industry trends.

On the first trading day of April, the A-share and Hong Kong markets jointly kicked off the “opening red.” By the close, the Shanghai Composite Index rose 1.46% to 3,948.55 points, the Shenzhen Component Index gained 1.70%, and the ChiNext Index increased 1.96%. The Sci-Tech Innovation 50 index performed the best, soaring 3.33% for the day, with a turnover of 67.78B yuan. The market showed a broad rally, with nearly 4,500 stocks rising. Total trading volume across the two markets expanded to 2.0125 trillion yuan, up 19.9 billion yuan from the previous session, indicating healthy volume-price coordination. Hong Kong markets were also active, with the Hang Seng Index up 2.26% and the Hang Seng Tech Index up 2.6%.

Looking at sector performance, pharmaceuticals and technology became the “dual engines” of today’s market. Among the primary industries in the Shenwan first-level classification, the pharmaceuticals and biological sector led with a 3.99% increase, followed by communications, media, and electronics, which rose 3.36%, 2.94%, and 2.93%, respectively. Conversely, utilities declined 0.52%, while coal and oil & petrochemicals fell 0.19% and 0.13%. This clearly indicates a shift of funds from traditional cyclical sectors to growth-oriented tracks.

Focusing on the pharmaceutical sector, today’s gains were comprehensive. Segments like medical services, cell immunotherapy, and recombinant proteins led the gains. Guangsheng Tang and Ruizhi Medicine both hit the 20-centimeter daily limit, while Jinyao Pharmaceutical surged to four consecutive limit-ups. Rundu Shares, AngliKang, and Kingmed Biological also hit the daily limit. The strength of the innovative drug sector is no coincidence—after prior adjustments, market expectations and holdings have returned to low levels, while industry fundamentals are steadily improving. Whether through BD expansion or commercialization performance, positive signals are emerging. Sectors like CXO are also showing clear marginal improvements. Coupled with catalysts such as major industry conferences, the trend of capital flowing back into pharmaceuticals is becoming more evident.

Turning to technology, computing hardware concepts performed especially well. ZhiliFang hit a new high with a 20cm limit-up, Yongding Shares also surged to the limit, and Tianfu Communication rose over 10%. The direct catalyst was Nvidia’s announcement of a $2 billion investment in collaboration with Marvell to develop silicon photonics technology, igniting bullish enthusiasm in segments like CPO and GPUs. Meanwhile, themes such as AI applications, computing leasing, semiconductors, robotics, and consumer electronics also became active, creating a multi-point flowering pattern in the tech sector.

Notably, the metro equipment sector opened high but then declined, with Tongye Technology leading the decline; oil and gas stocks sharply fell in the afternoon, with Keli Shares and Tongyuan Petroleum among the biggest losers; the power sector mostly declined, with Shunfa Hengneng and Huitian Thermal Power hitting the daily limit down. This high-low switch indicates that, amid index stabilization, funds are actively seeking new directions, highlighting a clear structural market characteristic.

Regarding the outlook, it can be viewed from both short-term and medium- to long-term perspectives.

In the short term, the April rally is likely to continue consolidating and accumulating. On one hand, although there are signs of a phased easing of geopolitical conflicts, uncertainties remain in subsequent developments, which will constrain a significant increase in risk appetite. On the other hand, earnings uncertainty during the earnings season will also make funds more cautious. However, the consensus that the index has a downside bottom is clear, and short-term adjustments are more about reshuffling opportunities. Chasing high is not cost-effective; instead, focus on segments with strong earnings certainty or signs of an upward inflection in prosperity.

In the medium to long term, the slow bull pattern of A-shares remains intact. On the macro level, 2025 marks the start of the “14th Five-Year Plan,” with clear policies to stabilize the market and promote reforms, maintaining ample liquidity to provide a solid bottom support. Micro-wise, corporate profits are gradually improving, and inventory cycles are showing signs of replenishment. Although expectations of tightening overseas liquidity persist, China’s assets are demonstrating resilience—thanks to a complete domestic supply chain and industry upgrades, which form an endogenous foundation to withstand external shocks. External impacts mainly influence short-term sentiment and rhythm, but will not alter the market’s long-term upward trend.

In terms of allocation, focus on two main themes: one is earnings certainty, paying attention to segments that may outperform in the first quarter; the other is industry trends, concentrating on core assets with global competitiveness, such as technological innovation (AI computing power, semiconductors), power equipment, and pharmaceutical innovation. Maintain strategic patience amid volatility, awaiting clearer market inflection signals.

Note: The market involves risks; investment should be cautious. This article is based on publicly available information and does not constitute any investment advice.

Author’s statement: Personal opinions are for reference only.