A-shares midday | Shanghai Composite Index up 0.32%, ChiNext up 1.73%, CPO concept strengthens

According to the Zhitong Finance APP, on August 12, the three major A-share indices opened lower collectively and then fluctuated upward, with the ChiNext Index leading the gains. The market showed a pattern of "indices opening low and rising high, more stocks rising than falling, and a comprehensive activity in the technology growth sector." As of the midday close, the Shanghai Composite Index rose by 0.32% to 3946.51 points; the Shenzhen Component Index rose by 1.25% to 14438.07 points; the ChiNext Index rose by 1.73% to 3610.65 points. The Sci-Tech Innovation 50 surged by 2.09% to 1745.15 points; the Beijing Stock Exchange 50 rose by 0.27% to 1116.26 points.

In the entire market, 3694 stocks rose, 1610 fell, 74 stocks hit the daily limit up, and no stocks hit the daily limit down, indicating more stocks rose than fell. The half-day trading volume in the Shanghai and Shenzhen markets was about 1.3819 trillion yuan, a decrease of about 137.5 billion yuan compared to the previous trading day.

Market Overview

On the upside, sectors such as CPO, optical communication, and optical chips related to AI computing power experienced a comprehensive explosion, with multiple stocks hitting the daily limit up; the laser industry and LiDAR followed suit; the computing power leasing concept was repeatedly active, with Chengdi Xiangjiang and Yunsai Zhili hitting the daily limit up; innovative drugs and CRO continued to be strong, with Baihua Pharmaceutical achieving seven consecutive limit ups; sectors such as semiconductors, communication equipment, and electronic chemicals led the gains in technology.

On the downside, traditional heavyweight sectors such as coal, oil and petrochemicals, and banks performed poorly; sectors related to poultry and fentanyl saw significant declines.

Overall, driven by the overnight performance of Lumentum, a leader in optical communication, which exceeded expectations, and the intensive introduction of industrial policies in Shanghai, funds concentrated on AI computing power hardware and innovative drugs; traditional cyclical and defensive sectors faced capital outflows. According to financial data from Star Mining, net inflows of main funds in the morning were concentrated in communication (over 7.5 billion yuan), electronics, semiconductors, etc., while there were net outflows in pharmaceuticals, construction engineering, and biological products.

Popular Sectors

1. CPO/Optical Communication Concept Fully Explodes

The CPO, optical communication, and optical chip concepts surged significantly in the morning, with Zhishang Technology hitting the daily limit up by 20%, Yongding Co., Ltd. and Tongding Interconnection hitting the daily limit up, Tianfu Communication rising over 8%, Shijia Photon rising over 8%, Taicheng Light rising over 7%, Guangku Technology rising over 6%, and Xinyi Sheng and Zhongji Xuchuang rising over 3%.

Commentary: On the news front, overnight (August 11), Lumentum, a leader in optical communication, announced its fourth-quarter results for fiscal year 2026 after the US stock market closed, with revenue of $1.01 billion, a year-on-year increase of 109%, exceeding the market expectation of $988 million; adjusted earnings per share were $3.23, a year-on-year increase of 267%, higher than the expected $2.97; non-GAAP gross margin rose to 50.4%. The company also provided revenue guidance for the first quarter of fiscal year 2027 of $1.23 billion to $1.28 billion, with the midpoint about 8% higher than market expectations. The CEO stated that demand for ultra-high-power CPO lasers is growing, and ELS modules have received their first orders, with optical technology beginning to penetrate rack-level connections. This financial report further validates the trend that the AI computing power bottleneck is shifting from GPUs to high-speed optical interconnects.

2. Computing Power Leasing Concept Repeatedly Active The concept of computing power leasing strengthened in early trading, with Chengdi Xiangjiang and Yunsai Zhilian both hitting the daily limit, while Hongjing Technology, Runjian Co., Ltd., Century Hengtong, and Xiechuang Data also saw gains.

Commentary: On the news front, the Shanghai Municipal Commission of Economy and Informatization issued the "14th Five-Year Plan for the Development of Software and Information Services in Shanghai" on August 11, proposing that by 2030, the industry scale aims to reach 4 trillion yuan, with the added value of the industry exceeding 1.1 trillion yuan. The plan clearly implements the "Hundred Thousand" intelligent computing cluster project, aiming to build super-large-scale intelligent computing clusters of 100,000 cards in Songjiang, Lingang, Qingpu, and other areas. Additionally, according to data from the China Academy of Information and Communications Technology, the domestic computing power leasing market is expected to reach 68 billion yuan in the first quarter of 2026, a year-on-year increase of 62%, with the annual market expected to exceed 260 billion yuan.

3. The innovative drug concept continues to be strong

The innovative drug and CRO sectors remained active in early trading, with Baihua Pharmaceutical achieving a seven-day limit, Wanbang Pharmaceutical rising over 10%, Yuheng Pharmaceutical increasing over 6%, and Harbin Pharmaceutical, Medicy, and Baicheng Pharmaceutical also seeing gains.

Commentary: On the news front, the Shanghai Municipal Commission of Commerce and six other departments issued the "Construction Plan for the National Service Trade Innovation Development Demonstration Zone in Shanghai" on August 10, proposing support for the innovative development of the biopharmaceutical industry, supporting the global registration and certification of innovative drugs, modern traditional Chinese medicine, and high-end medical devices developed by enterprises, and enabling local sales. Additionally, the continued outperformance of interim results from overseas MNCs and CXO companies provides emotional support for the sector. It should be noted that Baihua Pharmaceutical announced on the evening of August 11 that the company primarily focuses on the research and development of small molecule chemical generic drugs as a CRO enterprise and does not involve innovative drug research and development. The company's revenue in the first quarter decreased by 30.68% year-on-year, and the net profit attributable to the parent company decreased by 67.94% year-on-year. The company's latest rolling price-to-earnings ratio is 184.25 times, significantly higher than the industry average of 34.96 times, indicating a risk of irrational speculation