The Shanghai Composite Index retook 4100 points in the afternoon! Today, there is one good news and one bad news about A-shares.

On February 4th, the market bottomed out and rebounded, with the Shanghai Composite Index returning to 4100 points, the Shenzhen Component Index turning positive, and the ChiNext Index narrowing its midday decline. By the close, the Shanghai Composite rose 0.85%, the Shenzhen Component gained 0.21%, and the ChiNext fell 0.4%.

In terms of sectors, coal concept stocks surged to limit-up, and space photovoltaic concepts exploded; airport shipping, real estate, hydrogen energy, and other sectors performed actively. On the downside, AI applications, precious metals, and computing hardware sectors led the declines.

Over 3,200 stocks in the entire market rose. The combined trading volume of the Shanghai and Shenzhen markets was 2.48 trillion yuan, shrinking by 63.3 billion yuan compared to the previous trading day.

After a sharp decline on Monday and a strong recovery on Tuesday, today’s theme for A-shares is “consolidation.”

The indices showed divergence but all strengthened in the afternoon.

Among the three major indices, the Shanghai Composite repeatedly pushed higher and regained the 4100-point threshold in the afternoon; meanwhile, the Shenzhen and ChiNext indices performed relatively weakly.

Among other major stock indices, the Shanghai Stock Exchange 50, CSI 300, and Dividend Index, representing heavyweight and core assets, also performed better.

This is related to a piece of good news we’ve noticed — the large-scale selling by big funds may have come to an end.

Data shows that some broad-based ETFs that had been experiencing significant net outflows, such as the well-known CSI 300, CSI 500, and CSI 1000 products, saw small net inflows yesterday (February 3).

Top 10 ETF products by net inflow on February 3

Recent changes in the circulation of Huatai-PineBridge CSI 300 ETF

Although the fund flow data for today (Wednesday) has not yet been disclosed, the trading volume of the top ten broad-based ETFs is not much different from yesterday, and related indices have slightly risen. It can be preliminarily judged that there has been no large net outflow of funds during the day, and continued net inflows are likely.

Combining the rebound after the Shanghai Composite Index dipped to 4002 points yesterday, if big funds stop “pressing the market,” the short-term bottom of the index may have already appeared.

That’s the good news. Now, let’s share some not-so-good news.

Even though the index has stabilized and rebounded, the divergence in sector performance means the short-term market is becoming “chaotic.”

The most obvious sign is that the rotation pace is accelerating.

Data shows that among industry indices, only one sector has continuously ranked on the gainers list from Monday to Wednesday — photovoltaic equipment.

Other hot sectors lack sustained momentum.

For example, precious metals and non-ferrous metals experienced a sharp decline on Monday, a recovery on Tuesday, and on Wednesday, there was an expectation of continued recovery along with commodity prices, but today’s performance was disappointing.

Similarly, communication equipment (CPO), commercial aerospace, and others, which led the recovery on Tuesday, often see “stronger gains on stronger days,” but their actual performance has also fallen short of expectations.

Additionally, sectors like semiconductors and AI applications repeatedly led declines on Monday and Wednesday, with Tuesday’s recovery seeming somewhat “strange.”

The rapid rotation creates a short-term experience for funds — chasing highs often results in losses the next day, and buying the dip does not guarantee positive feedback the following day.

As the Spring Festival approaches, active funds are gradually shifting toward “withdrawing for the holiday” or waiting until the last one or two trading days to speculate on news during the festival, which naturally affects the recent short-term ecosystem.

Of course, complaining won’t solve the problem of losing money; “adapting” is the key to survival.

A research report from Huaxi Securities states that while the market rebounded broadly on Tuesday, the difficulty of subsequent thematic battles remains high. It believes that the current sharp decline rebound differs from previous ones because the previous market stabilization was more solid, whereas the current “slow bull” policy guidance is not conducive to sustained large gains in themes.

However, there are still themes brewing momentum. For example, the AI application industry narrative continues to advance, with active but mediocre performance, and a “surprise attack” rally may occur later. The main line of computing power also warrants attention, but internal structural differentiation may deepen. Sectors like optical communications, PCB, and semiconductor equipment performed well, but core stocks in the high-growth computing hardware sector last year did not perform outstandingly, indicating that funds are still cautious about high-position stocks when pursuing high-quality, flexible stocks, or are waiting for further adjustments before re-entering.

Finally, let’s look at some sectors worth watching for leadership.

(1) Photovoltaic equipment, or space photovoltaics

On the news front, SpaceX, which is actively preparing for an IPO, announced it has acquired xAI. Elon Musk also stated that after the acquisition, SpaceX will promote plans to deploy data centers in space. Previously, Musk proposed that SpaceX and Tesla plan to build a total of 200GW of photovoltaic capacity in the United States over the next three years.

Media reports indicate that multiple industry chain insiders have recently “sounded out” the Chinese photovoltaic industry.

CICC’s research report points out that under the backdrop of booming commercial aerospace, space photovoltaics, as the core direction for power system upgrades, is moving toward a new stage of technological upgrading and industrialization delivery driven by the constellation’s mass deployment.

(2) Coal, combustible ice, hydrogen energy, and other “new and old energy” sectors

According to reports, Indonesian mining officials stated on Tuesday that due to the Indonesian government’s significant production reduction plan, the country’s miners have suspended spot coal exports. Last month, Indonesia reduced production quotas for major miners by 40% to 70% compared to 2025 levels, as part of its plan to boost coal prices.

Additionally, the Spring Festival shutdown is a seasonal norm. Zhuochuang Information pointed out that the concentration of private coal mines taking holidays and the short-term suspension of state-owned mines will directly lead to a decline in domestic refined coal output in February compared to January. The capacity restructuring brought about by new regulations is expected to impact refined coal output by 4.5 million tons from February to March, accounting for 12% of quarterly production.

CITIC Securities states that the coal sector’s prosperity has already begun to recover in the second half of 2025, and the performance of listed companies in 2026 may follow coal prices upward, with a phased market expected in 2026.

In terms of hydrogen energy, Guojin Securities notes that the biggest difference between the “14th Five-Year Plan” and the “13th Five-Year Plan” for hydrogen energy is the urgency of policies and the more complete infrastructure. Under the energy revolution’s second half — decarbonization outside electricity — hydrogen ammonia and alcohols are indispensable as important energy carriers, and the entire industry chain is ushering in significant development opportunities.

(3) Liquor

The liquor sector opened lower in the morning but rose steadily in the afternoon, with red figures fluctuating. Although the gains were modest, the daily line recorded three consecutive positive days (a weak rebound on Tuesday), making it one of the few sectors with sustained momentum recently.

CITIC Construction Investment’s research report predicts that the liquor industry will bottom out in 2026, with leading companies’ market share increasing. It is optimistic that the sector may present a ten-year bottom investment opportunity around the Spring Festival.

At first glance, photovoltaic, new energy, and liquor all rose on the same day — one can’t help but wonder, what year is it?

(Source: Daily Economic News)