Shanghai Composite Index drops 1.43% in half-day trading, trading volume shrinks by over 370 billion yuan; shipbuilding and planting industries strengthen

The three major indices in the A-share market all declined, with the Shanghai Composite and ChiNext Index both falling more than 1%. In the market, gains were led by planting industry, shipbuilding, power grid equipment, aerospace, smart grid, aircraft carrier concepts, and pumped storage. The worst performers included coke, gas, refining and trading, shipping ports, oil and gas equipment services, insurance, and precious metals, which dragged the market down.

By midday, the Shanghai Composite dropped 1.43% to 4,063.57 points; the Shenzhen Component fell 0.98% to 13,884.37 points; the ChiNext Index declined 1.64% to 3,156.95 points; the STAR 50 Index decreased 0.68% to 1,378.96 points; and the Beijing 50 Index was down 0.45% to 1,408.74 points. A total of 1,331 stocks rose, while 4,069 declined, with 23 stocks hitting the daily limit up. The total trading volume for both markets in the first half of the day was 16.396 billion yuan.

Today’s Highlights

National Bureau of Statistics: China’s official manufacturing PMI for February is 49%, down 0.3 percentage points from last month

In February, the Manufacturing Purchasing Managers’ Index (PMI) was 49.0%, down 0.3 percentage points from the previous month, indicating a slight slowdown in manufacturing activity. Large enterprises’ PMI was 51.5%, up 1.2 points from last month and above the threshold; medium and small enterprises’ PMI were 47.5% and 44.8%, respectively, down 1.2 and 2.6 points from last month, both below the threshold. Among the five sub-indices that make up the manufacturing PMI, production, new orders, raw material inventories, employment, and supplier delivery times all fell below the threshold.

Halo Trading Gains Popular: Revealing the List of Low-Valuation Potential Stocks Favored by Institutions

According to statistics, among stocks rated by 10 or more institutions, 29 stocks (from sectors such as petrochemicals, coal, non-ferrous metals, and chemicals related to Halo trading) are projected to have a 2026 consensus net profit that yields a P/E ratio below 15 times. In terms of institutional attention, XCMG Machinery received ratings from 21 institutions, ranking first. China Coal Energy and Satellite Chemical each received ratings from 20 institutions, while stocks like Star Technology, Zoomlion, Zhejiang Dingli, and Shaanxi Coal Industry each received over 15 ratings.

Oil & Gas and Shipping Sectors Show Collective Anomalies; Multiple Companies Respond to Middle East Conflict Impact

On the evening of March 3, more than a dozen oil and gas stocks and energy companies, including China National Petroleum Corporation (601857.SH), Sinopec (600028.SH), CNOOC (600938.SH), Zhongman Petroleum (603619.SH), and CNOOC Services (601808.SH), issued abnormal trading notices warning of risks. Several listed companies also responded via announcements or interactive platforms regarding the impact of Middle East tensions on their operations.

“Three Big Oil” Stocks Hit Limit Up for Two Consecutive Days; Evening Announcements Warn of Oil Price Fluctuation Risks

From March 2 to March 3, China National Petroleum, Sinopec, and CNOOC hit the daily limit up for two consecutive trading days, setting a record in the A-share market. On the evening of March 3, these companies issued notices about abnormal stock price movements, jointly warning that “short-term oil price fluctuations are highly uncertain” and advising investors to be cautious.

Chemical Industry Futures and Stocks Surge; Social Security Funds Heavily Invest in 7 Key Stocks

From an institutional focus perspective, 13 stocks rated by five or more institutions include Baofeng Energy and Hualu Hengsheng, which received over 20 ratings each. Among these, seven stocks—Hualu Hengsheng, Haohua Technology, Sinochem Holdings, Satellite Chemical, Guanghui Energy, Hubei Yihua, and Baofeng Energy—were heavily held by social security funds as of the third quarter of 2025.

Institutional Views

Huatai Securities: Expect Stable Growth in Domestic Wind Power Installations During the 14th Five-Year Plan; Favor Whole Machine Manufacturers, Offshore Wind, and Core Components

Huatai Securities research reports that domestic wind power installations are expected to remain high in 2026, with offshore wind contribution likely increasing. Given that wind turbine bidding volumes remain high in 2025 and considering that about 9 GW of offshore wind projects are under construction but not yet connected, it is estimated that new domestic installations in 2026 will reach 130 GW, with 120 GW on land and 10 GW offshore. Looking ahead, under new demands such as direct grid connection and old-for-new upgrades, combined with the gradual expansion of deep-sea wind, the wind power installation during the 14th Five-Year Plan is expected to grow steadily. The outlook remains positive for profit recovery among turbine manufacturers, offshore wind expansion, and core component suppliers: 1) Profit recovery for turbine manufacturers supported by rising domestic land wind prices, increased order delivery, and higher offshore and export ratios, with hydrogen and ammonia derivatives opening new growth avenues; 2) Offshore wind demand benefiting from geopolitical conflicts disrupting European energy supply, with government subsidies supporting local projects and demand spilling over to domestic manufacturers; 3) Core component suppliers benefiting from tight supply-demand for main shaft bearings and cast main shafts, with capacity releases supporting performance growth.

CITIC Securities: Upgrades in AIDC Power Supply Systems Create New Opportunities; Overseas Grid Upgrades Are Clear Trend

CITIC Securities reports that upgrades and iterations of AIDC power supply systems are creating new opportunities, with a clear trend of overseas grid upgrades. AI-powered power systems are evolving from uninterruptible power supplies (UPS) to fully direct current (DC) systems, with increasing output voltage levels and faster SST (Superconducting Storage Technology) solutions. As server power densities increase, product volume and prices are rising, creating demand for supercapacitors. CITIC Securities is optimistic about the growth of domestic server power brands, with capacity shortages and system upgrades driving exports of new products like supercapacitors and SST systems. Additionally, AIDC and new energy sectors are fueling overseas grid upgrade demands, with expectations that other countries will follow China’s “14th Five-Year Plan” for power system upgrades, focusing on: 1) energy storage; 2) base load power equipment; 3) grid infrastructure.

CICC: The Turning Point in Beijing and Shanghai Real Estate Markets Is Approaching

CICC reports that the current real estate cycle has lasted over four years. Considering recent supply-side and policy changes, CICC believes that housing prices in Beijing and Shanghai are likely to stabilize this year, with the real estate sector gradually entering a beta phase. Investors are advised to consider three strategies based on risk appetite: 1) allocate to stable assets with clear beta characteristics; 2) focus on structural growth in property development, targeting projects with strong product competitiveness, high-quality inventories, and significant valuation discounts; 3) some private enterprises may rebound, offering opportunities for substantial revaluation amid oversold valuations.

Galaxy Securities: Continue Monitoring Opportunities for Low-Positioning Investment in Leading Internet and Tech Giants

Galaxy Securities notes that as domestic large models improve, the “hundred-model” competition is entering a knockout stage, potentially leading to token inflation. Native large model companies, due to their pure business models, have advantages over traditional internet giants and are currently favored by capital. However, the competition for traffic—an essential asset in the AI era—remains crucial. In the long term, internet companies with traffic advantages are expected to regain their position in the AI era, with native large model firms becoming key parts of the industry chain. It is recommended to keep an eye on low-positioning opportunities in leading internet and tech giants, focusing on segments such as: 1) domestic computing power industry chain; 2) IDC service providers and computing power leasing; 3) large model developers; 4) domestic information innovation firms; 5) AI agents and applications; 6) cloud computing providers; 7) integrated machines and edge AI; 8) data element industry chain including supply, circulation, and application companies; 9) industrial software.

CITIC Construction Investment: Regional Integration Accelerates; Mergers and Acquisitions Rewrite the Securities Industry Landscape

CITIC Construction Investment reports that Dongwu Securities plans to acquire Donghai Securities, marking a new phase of provincial financial resource integration. Since 2025, industry mergers and acquisitions have been frequent, forming a dual mainline pattern: top-tier alliances creating first-class investment banks, and regional consolidation led by local state-owned assets to develop domestic champions. The driving logic is shifting from policy-led to a combination of policy and market forces, promoting industry segmentation and tiered competition. The top-tier landscape is reshaping into multiple strong players, with smaller brokers being phased out and regional mergers providing alternative development paths.

Guojin Securities: The Market Is on the Eve of a New Upturn

Guojin Securities states that the world currently faces technological challenges to industrial order and regional conflicts challenging globalization. Physical assets, often overlooked during periods of prosperity, will become systemically important. Chinese assets, with their strong physical attributes, are worth re-evaluating amid turbulence. The market rally in China in 2025 resembles an overflow from U.S. financial expansion and tech bubbles. Although some volatility during this transition is inevitable, it is important to recognize that this is not a bear market but the prelude to a new upward cycle for Chinese assets.