A-shares closing review: Shanghai Composite Index fell 0.74%, narrowly holding above 3,900 points, the ChiNext Index dropped over 2%, and over 4,300 stocks in the entire market declined.

Ask AI · The pharmaceutical sector rises against the trend—how do FDA new drug approvals drive the market?

On April 2, the three major A-share indices opened lower and moved downward during the day, with a slight rebound near the close. As of the close, the Shanghai Composite Index fell 0.74% to 3,919.29 points, the Shenzhen Component Index dropped 1.6% to 13,486.94 points, the ChiNext Index fell 2.31% to 3,172.65 points, and the STAR 50 Index fell 2.77% to 1,262.18 points. The trading volume of the two exchanges (Shanghai and Shenzhen) totaled 1.84 trillion yuan, and more than 4,300 stocks across the whole market declined.

On the trading screen, the pharmaceutical sector surged against the trend. Tianjin Pharmaceutical achieved five consecutive daily limit-ups, Shuanglu Pharmaceutical logged four daily limit-ups in seven days, and Peking University Medicine and Yibai Pharmaceutical both hit two consecutive daily limit-ups. Energy and oil-and-gas stocks were active, with China National Oil Engineering, Heshun Petroleum, Bohui Shares, Beiken Energy, and Lanyan Holdings all hitting the daily limit. The optical fiber concept repeatedly strengthened, with Neng Tai Shan hitting six daily limit-ups in eight days, Zhongli Group hitting six in ten days, and Longfei Optic Fiber, Tefa Information, and Hengtong Optoelectronics all continuing to set new historical highs. On the downside, the computing power leasing concept saw broad-based adjustments, and multiple stocks including Qunxing Toys, Youkede, and Litong Electronics fell sharply.

Hot Sectors

Oil-and-gas stocks rebound broadly

Oil-and-gas stocks were active, with Heshun Petroleum, Bohui Shares, Beiken Energy, and Lanyan Holdings all hitting the daily limit.

On the news front, WTI crude oil and Brent crude oil futures’ main contracts both rose by more than 4% intraday.

Pork concept fluctuates and rebounds

The pork concept fluctuated and rebounded intraday. Dayu Biological rose by more than 7%, while Huatong Shares, Juxing Agriculture and Animal Husbandry, Tenkang Biological, Muyuan Shares, Lihua Shares, and Shennong Group followed suit.

On the news front, according to a notice released on the Ministry of Commerce website on Thursday, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance are currently carrying out the procurement and storage work for central reserve frozen pork. Next, the Ministry of Commerce will continue to closely monitor pork market conditions, strengthen trend analysis, coordinate with relevant departments to manage reserve regulation, and ensure steady operation of the market.

Pharmaceutical sector rises against the trend

The pharmaceutical sector rose against the trend. Tianjin Pharmaceutical achieved five consecutive daily limit-ups, while Peking University Medicine and Yibai Pharmaceutical both hit two consecutive daily limit-ups.

On the news front, Eli Lilly (local time on Wednesday) announced that the U.S. Food and Drug Administration (FDA) has approved its GLP-1 oral drug for market launch. In addition, from April 14 to 16, 2026, the 37th International Alzheimer’s Disease Association Global Conference will be held in Lyon, France.

Optical fiber concept repeatedly strengthens

The optical fiber concept repeatedly strengthened, with Neng Tai Shan hitting six daily limit-ups in eight days, Zhongli Group hitting six in ten days, and Longfei Optic Fiber, Tefa Information, and Hengtong Optoelectronics all continuing to set new historical highs.

On the news front, according to reports, scientists at University College London in the UK have set a new record for the speed of data transmission over existing commercial optical fibers—450 terabits per second (Tb/s). This speed is equivalent to ten times that of current commercial networks.

Institutional Outlook

China Galaxy Securities: The market is likely to move into a phase of range-bound trading, with a bottom forming—and structural rotation

Yang Chao, Chief Strategy Analyst at China Galaxy Securities, believes that as the U.S.-Iran ceasefire negotiations begin and uncertainties during the earnings season gradually fade, the market is expected to enter a phase of range-bound trading with a bottom forming and structural rotation. The three major rationales—policy support, funds entering the market, and the revaluation of Chinese assets—remain unchanged. The downside room for A-shares is relatively limited. He suggests adopting a performance-led strategy and laying out positions when opportunities arise. In terms of specific allocation, Yang Chao suggests focusing on three directions: first, sectors benefiting from revaluation of strategic resource value. Market attention to inflation expectations and geopolitical security has increased significantly, and sectors such as gold, copper, rare earths, and key materials are expected to receive valuation reappraisals. Second, sectors related to technological self-reliance and new quality productive forces. Multiple major technology summits are expected in April, which should catalyze industry chains including AI computing power and optical modules, semiconductors and advanced manufacturing, humanoid robots and the low-altitude economy. Third, defensive sectors such as high-dividend and stable cash-flow. During periods of market turbulence, sectors with high dividends, low volatility, and stable cash flows remain the preferred choices for core holding allocations. He recommends paying attention to related sectors such as utilities, environmental protection, and pharmaceutical outsourcing (CXO).

CITIC Securities: Overseas rate cuts + improved domestic financing—continuing to be optimistic about demand recovery across the pharmaceutical industry chain

A CITIC Securities research report states that the domestic innovative drug BD (business development) boom has driven a rebound in downstream demand. In companies’ sources of funding, the share of equity financing has dropped significantly, and the share of BD transactions has increased to nearly 40%. In Q1 2026, the total outbound BD amount exceeded 60 billion, reaching more than 600 billion in value, which is nearly half of the total for all of 2025. By segment, small-molecule CDMO is set to gain a larger share thanks to China’s global supply-chain advantages. Combined with stable domestic supply amid conflicts in the Middle East, it may receive more orders. Preclinical and clinical CROs could see volume and price increases as financing improves and early-stage research demand flows through. Although the short-term performance of research services and upstream segments may be affected by exchange-rate fluctuations in Q4 2025, the outlook for early-stage research demand remains positive for 2026. For leading companies, revenue is expected to grow by more than 20%, and valuations are considered reasonable. Key recommendations include: ① leading CXO companies; ② key companies in the preclinical and clinical CRO segments; ③ research services and upstream sectors with relatively reasonable valuations.

West China Securities: Continue to dig into undervalued sectors

Undervalued value-style stocks continued to lead in the first quarter. The reasons are that the overall valuation of the market is on the high side and risk appetite is under pressure, so capital has a cautious attitude toward “high valuations.” However, the logic for stabilizing the market remains, and exiting the market entirely may mean missing rebound gains. Under these circumstances, capital tends to look for opportunities to catch up in undervalued sectors. In the second quarter, continue to mine undervalued sectors. From the PE and PEG perspectives, power equipment and media are worth continued attention: their PE (TTM) percentiles since 2016 are 67% and 68%, respectively, and their PEG is both 0.91. From the PB perspective, focus on agriculture and animal husbandry as well as big finance. Their PB percentiles are generally below 20%, and their ROE is above 8%. As for nonferrous metals and coal, their PB percentiles are higher, and the market performance depends on whether inflation can continue to exceed expectations.