# Thursday's A-share Market: "Divergence" in Two Words

Thursday's A-share market can be summed up in two words: "divergence." The Shanghai Composite Index lacked momentum from the start, opening and trading lower throughout the day. The intraday decline exceeded 20 points, ultimately failing to hold above the 5-day moving average and the 4,100 round number. However, the Shenzhen market proved more resilient to the decline, with both indices turning red by around 2:30 PM, displaying considerable strength.

Trading volume is worth noting—Shanghai only recorded 1.18 trillion yuan in turnover Thursday, over 400 billion yuan less than the previous day, representing a clear contraction.

**Sector Rotation Worth Watching**

The biggest gainer on the day was precious metals, up over 3% and leading both markets. In addition, electronic chemicals, agrochemicals, glyphosate, energy metals, horse racing concepts, batteries, hotels and tourism, phosphate chemicals, zinc metals, storage chips, and stocks held by the National IC Fund also ranked at the top. However, most small metals and chemical sector gains remained under 2%, nowhere near as aggressive as precious metals.

Why are precious metals and small metals sectors performing so well? It's driven by commodity prices. Looking back over the past year, these two sectors' doubling in value is no longer news. Dragon stocks like Zijin Mining and Luoyang Molybdenum have surged wildly, while large-cap blue chips like Jiangxi Copper and Shandong Gold have also doubled. But here's a reality check—small metals sectors are already at elevated levels, and investors shouldn't chase these gains in the short term. For targets that have already doubled or risen several times over, caution is indeed warranted.

**Two Directions Worth Monitoring Closely**

The first is technology themes centered on semiconductors. Semiconductors are the backbone of the tech sector and have historically been the engine of A-share bull markets. As long as the semiconductor sector maintains strength, it can stimulate market investment enthusiasm. Looking ahead, semiconductors' uptrend will likely continue, and for the STAR Board Index to break through, it needs sustained strength from semiconductors as support.

The second is oversold chemical sectors. Dragons like Wanhua Chemical, Hengli Petrochemical, and Satellite Chemical have been battered down by half, now in obvious oversold conditions. From market logic, oversold situations often breed rebound opportunities. With chemical sectors having fallen so sharply earlier, rebound expectations are relatively stronger.

**Shanghai Composite's Medium-term Pattern Unchanged**

While short-term pullbacks have broken key levels, the overall strength pattern hasn't changed. The 10-day and 20-day moving averages will become important support. The Shanghai Composite's breakthrough above 4,000 and 4,100 points this year has primarily relied on trillion-yuan-level trading volume support. From this logic, the index breakthrough remains valid, with 4,000 points transitioning from resistance to support. As long as the medium-term support at 4,000 points and the 20-day moving average holds, the Shanghai Composite has potential to strengthen again. Sustained trillion-yuan trading volume is the foundation for pushing the index higher steadily.

This volume-contraction decline is actually a positive signal. Contraction indicates no large-scale capital flight from the market, with bull sentiment remaining solid. Moreover, trillion-yuan-level trading volume is entirely sufficient to support the Shanghai Composite's continued advance. From historical trends, maintaining trading volume in the 1-1.3 trillion yuan range is most favorable for the Shanghai Composite's sustained gains.

**Commercial Spaceflight: Opportunity After Adjustment**

Thursday's commercial spaceflight sector weakened across the board, with the sector declining over 3%, military electronics, military informatization, satellite navigation, and terahertz segments falling over 4%. However, looking back over the past month, this sector has risen over 50%, with doubling gainers everywhere. For such strong sectors, adjustment after significant gains is perfectly normal. From the trend perspective, commercial spaceflight's uptrend hasn't ended. What's key? The sector's material positive catalysts haven't played out yet. Core stock market investment logic includes speculating on expectations, and before positive news materializes, this sector warrants continued attention. After adjustment stabilizes, a second wave of gains is highly probable.

**Low-valuation Blue Chips: Balancing Safety and Returns**

Regardless of market conditions, allocating defensive assets is always necessary, especially during sustained A-share rallies. During strong market upswings, thematic sectors are often the stars; but once markets adjust, low-valuation, high-profit, high-dividend, long-neglected blue chips become the preferred choice for capital huddling. Some blue chips can even rise against the trend during bear markets. Given current market conditions, investors should consider allocating defensive low-valuation assets. Specific selection criteria: market cap exceeding 100 billion yuan, P/E ratio below 20x, dividend yield exceeding 3% for three consecutive years, and stock price at low levels. These targets offer considerable long-term investment value and warrant continued investor tracking.