Rare! "Zhonglao Deng" is experiencing a major surge—has the style shifted?

On Wednesday (February 4), the market bottomed out and rebounded, with the Shanghai Composite Index returning to 4100 points and the Shenzhen Component Index turning positive. Earlier, it had fallen more than 1%. The ChiNext Index narrowed its midday decline in the afternoon. The total trading volume across the two markets was 2.48 trillion yuan, shrinking by 63.3 billion yuan compared to the previous trading day. By the close, the Shanghai Composite rose 0.85%, the Shenzhen Component gained 0.21%, and the ChiNext Index fell 0.4%.

In terms of market sectors, hot spots rotated quickly. On the gain side, coal, photovoltaic, real estate, building materials, and aerospace sectors performed strongly; on the decline side, AI applications, precious metals, and computing hardware sectors led the declines.

Is a Market Style Shift Coming?

On Wednesday, led by photovoltaic, coal, real estate, building materials, and aerospace stocks, the major index intraday chart showed a bottoming and V-shaped rebound. From a style perspective, large-cap stocks outperformed small-cap stocks.

Regarding whether a style shift is happening, the China Merchants Futures Gold and Metal Team’s research report on February 3 pointed out that the current market has reached a turning point in stock style, switching from small- and mid-cap to large-cap style. They recommend increasing allocations in strategies related to the CSI 300, CSI 500, and other large-cap indices, and reducing exposure to small and micro-cap stocks.

Zheshang Securities’ research report on January 31 also mentioned that the “small strong, large weak” pattern has come to an end, suggesting a gradual shift from small-cap indices like the China Securities 2000 to the CSI 300 and CSI 500.

However, there are differing opinions. A research report from Everbright Securities on February 1 stated that from a style perspective, small-cap stocks tend to perform better in spring markets. This may be related to increased risk appetite during spring market rallies and the fact that incremental market funds mainly come from individual investors. Therefore, structurally, focus should be on hot sectors. Growth themes benefit from sustained industry heat and increased risk appetite among investors during spring markets. Additionally, industries with good annual report performance are also worth attention.

Elon Musk’s Team Returns to China for Space Photovoltaics Revival

The photovoltaic sector was driven mainly by news of “Elon Musk’s team coming to China for research.” On Wednesday, photovoltaic equipment stocks surged, with many hitting the daily limit, including stocks like Trina Solar, JinkoSolar, and Runze New Energy, which all saw 20% daily limit increases.

On the news front, according to Jiemian News, industry insiders revealed that last week, Musk’s team conducted research on Chinese photovoltaic companies including TCL Zhonghuan, JinkoSolar, and Jingsheng Mechanical & Electrical. The relevant companies did not directly respond to the authenticity of these reports.

Earlier, JinkoSolar’s wiring staff publicly confirmed that the company had recently had contact with a related inspection team from Musk’s group. Even earlier, Musk’s team had also conducted research on some photovoltaic equipment suppliers.

SpaceX previously launched a plan for a constellation of one million computing satellites. The plan involves deploying up to 1 million satellites in orbits at 500-2000 km altitude, with a solar-synchronous orbit inclination of about 30 degrees, powered by solar energy, and connected to the existing Starlink network via optical links (laser), routing computing results to ground users.

Guotai Haitong Securities’ research report believes that related photovoltaic equipment manufacturers will continue to benefit. From the perspective of different segments: (1) Solar cell segment: recommended stocks include Mawei Co., Jiejia Weichuang, Laplace, and Dir Laser; (2) Module segment: recommended stock is Autowise, with related companies like ST Jinjing; (3) Silicon wafer segment: related companies include Gaocao Co., Jingsheng Mechanical & Electrical, Liancheng CNC, and Shuangliang Energy Saving.

Coal Explodes with Limit-Up Surge

On Wednesday, coal stocks also experienced a rare explosion, with Shanxi Coking Coal, Yankuang Energy, and Shaanxi Black Cat hitting the daily limit.

On the news front, according to Securities Times, the Indonesian government proposed a significant production reduction plan, and the country’s miners have suspended spot coal exports. Data shows that China is Indonesia’s largest importer (importing 242 million tons in 2024, accounting for 42.73% of its exports). The suspension of exports will affect 5.3% of China’s thermal coal supply, intensifying inventory pressure at southeastern coastal power plants. Meanwhile, there are also reports of rising coal prices domestically.

As the world’s largest exporter of thermal coal (accounting for over 25% of global trade), Indonesia’s export suspension will tighten supply and push up international coal prices. Analysts believe buyers may turn to Russia, Australia, and others, but short-term gaps are hard to fill.

Cinda Securities’ research report states that supply remains rigid, with steady growth in coal production. Since 2025, China’s coal supply has shown characteristics of “slow domestic production growth and significant contraction of imports,” with overall supply entering a low-growth phase.

On the demand side, marginal improvement is observed. In terms of electricity demand, winter heating combined with industrial production recovery has led to continuous increases in daily power plant consumption, with thermal power playing a stabilizing role. In non-electricity demand, demand for chemical coal remains steady, and the decline in industries like steel and cement has narrowed. The weak recovery in real estate and manufacturing further boosts coking coal demand.

Some institutions forecast that the coal price center in 2026 could rise by 5%-7% compared to 2025, with better price elasticity for coking coal, and industry profit recovery expectations are clear.

Real Estate and Building Materials Lead Gains

On Wednesday, real estate and building materials stocks also performed strongly, with Rong’an Real Estate, Jingtou Development hitting the daily limit, and Xincheng Holdings and China Merchants Shekou following suit.

According to Xinhua News Agency, on February 2, Shanghai officially launched the purchase of second-hand housing for affordable rental housing projects, starting with pilot programs in Pudong, Jing’an, and Xuhui districts. Shanghai will strengthen the matching of supply and demand, linking leasing and purchase, to form a good pattern of “policy guidance, market operation, multi-party coordination, and public benefit.”

Guotou Securities’ research report on February 4 believes that recent policies in multiple regions have relaxed real estate restrictions, releasing positive signals for the industry. The real estate policy remains supportive, with second-hand home sales data supporting stable sales area. According to CRIC Research Institute, in 2025, the transaction area of second-hand homes in 30 key cities is expected to reach 214 million square meters (year-on-year +0.2%), a new high since 2021, accounting for 65% of total sales area, with a +4 percentage point increase year-on-year. In Beijing, Shenzhen, and Hangzhou, second-hand home transaction areas in January 2026 are expected to maintain rapid growth, with YoY increases of 16.10%, 20.59%, and 20.73%, respectively. This is expected to continue supporting demand for building materials. If prices stabilize, it may also boost new construction demand in real estate.

(Source: Oriental Wealth Research Center)