Summary of Key Points
Today, the A-share market experienced a stark contrast centered around the new share issuance of Changxin Technology: on one hand, investors from across the country (even bank wealth management subsidiaries) were eager to participate in the offering due to its low threshold and low valuation; on the other hand, the already listed storage sector saw a collective collapse. At the same time, funds shifted from the storage stocks to sectors such as pharmaceuticals, entertainment, and AI. Lanqi Technology's stock price plummeted after it was investigated by South Korea for suspected price collusion. The South Korean market also experienced extreme volatility due to interest rate hikes and restrictions on leveraged ETFs (up 6% yesterday and down 6% today). There was significant interest in the licensing of innovative pharmaceutical drugs, while stocks of storage companies with expected performance growth fell sharply.
1. Changxin Technology's New Share Issuance Creates a Boom, While Old Storage Stocks Cool Down
How popular was Changxin Technology's new share issuance? Winning just one lot cost 4,330 yuan—cheaper than even some domestic flagship smartphones—and even bank wealth management subsidiaries got in on the action. However, despite the excitement, the odds of winning were certainly low (most people simply clicked their mouse a few more times).
Why did the old storage stocks decline? Because Changxin's valuation was too attractive: with a net profit of over 50 billion yuan in half a year and an issued market value of 579.2 billion yuan, its price-earnings ratio was less than 5 times (equivalent to a new store selling the same products at a fraction of the old one's price). As a result, these old storage stocks were considered overpriced and all hit daily limit-downs today (for example, the four leading companies in advanced packaging all fell).
More importantly, Changxin will use the funds raised to the tune of over 60 billion yuan. Today, the overall market volume shrank to 2.4 trillion yuan, indicating that existing investors were reluctant to act as buyers during this "bloodletting" period. The 1.4 trillion yuan released by the central bank yesterday seemed to be reserved specifically for Changxin.
2. Massive Capital Shift: Markets Drop, but Half of the Stocks Rise—Where Did the Money Go?
The Shanghai Composite Index fell 1.85%, and the ChiNext index nearly 3%, yet 2,495 stocks rose (nearly half of the total). The money moved from storage stocks to the following sectors:
- Pharmaceuticals: Harbin Pharmaceutical had five consecutive daily limit-ups, and Pianzihuang also hit a limit-up, as the new essential drug list allowed innovative drugs to enter the official catalog for the first time (a policy that opened doors for pharmaceutical companies). Additionally, Dizhe Pharmaceutical licensed its lung cancer drug to AstraZeneca for an upfront payment of 600 million US dollars. In the first half of the year, there were 81 licensing deals for domestic innovative drugs, totaling 110 billion yuan—although most of this was for future milestones, it still represents significant revenue.
- Entertainment: The summer box office exceeded last year's with earnings of 3.5 billion yuan, and films like "Kung Fu Women's Football" were very popular. As the heat of summer increased, cinemas became more crowded, leading people to seek entertainment.
- AI: The top two sectors in terms of net capital inflows were AI applications (8.8 billion yuan) and AI computing power (8 billion yuan). It seems that while there is a focus on reducing chip prices, the market has not abandoned AI; however, most profitable AI applications are currently Chatbots.
3. Lanqi Technology Hits a Snag: Monopoly Advantages Turn into Investigation Risks
Lanqi Technology is the global leader in memory interface chips (with a 36.8% market share, competing with Japanese companies like Renesas and American Rambus). Today, its South Korean office was raided by prosecutors on suspicion of price collusion (the three largest sellers together account for 93% of the market—could they have colluded to raise prices?). As a result, Lanqi's A-share price fell 16.44%, and its Hong Kong stock price dropped nearly 20%. The previous oligopoly structure was once a protective factor for its valuation, but now it has become a risk due to the investigation.
4. Are Stocks with Better Performance Falling More Sharply?
Why are stocks in the storage sector falling even more despite their positive earnings? Yesterday, there was no clear reason for De Mingli's limit-down, but today the reasons are evident: Baiwei Storage forecasted a net profit of over 7 billion yuan for the first half of the year, yet its stock price dropped by 20%; Jiangfeng Electronics' profits doubled, but its stock fell 15%; and top-performing storage stocks like Jiangbolong and Shannon Xinchuang all tumbled.
The reason is that what were once positive earnings expectations have now turned into negative factors. The previous rise was based on market speculation (people believed the companies would earn more), but now that actual performance figures are available, those expectations have been shattered. In the stock market, only unlimited imagination can support unlimited prices—this is an established rule.
5. South Korean Market Volatility: A Lesson from Extreme Ups and Downs
South Korea took two significant actions today: it banned new leveraged ETFs targeting individual stocks (meaning investors can no longer bet twice as much on companies like Samsung or Hynix) and raised interest rates to control inflation driven by rising oil prices. As a result, the Korean stock market fell 6.37% today, after rising 6.24% yesterday. It's like being in the eye of a typhoon: when the wind stops suddenly, you shouldn't go outside, as the wind outside the eye can be even more fierce.
A young person from Seoul invested 80 million Korean won in the stock market and lost a quarter of his investment. Yesterday, he thought the storm had passed, but today he realized it was still in the eye of the typhoon. This teaches us not to take short-term market fluctuations too seriously and not to risk essential funds on the market.
Finally, let's mention tomorrow's WAIC Conference (Shanghai AI Exhibition), where global AI companies will showcase their offerings to see if there are truly profitable AI applications. I've pre-ordered three AI recording cards in anticipation of finding useful insights. However, it's so hot in Shanghai that I can't find four short-sleeved shirts; I need to buy some clothes first… (That’s the real life of an ordinary person.)
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