Group 1 - The chemical sector experienced a significant drop on November 17, with the chemical ETF (516020) initially rising by 1.69% before falling to a decrease of 0.24% at the time of reporting [1] - Key stocks in the sector, including coatings, battery chemicals, and fluorochemicals, saw notable declines, with SanKeTree dropping over 3%, and Enjie and Sanmei both falling over 2% [1] - The report indicates that the peak of new capacity additions in the chemical industry has passed, leading to a reduction in capital expenditure, which is expected to improve the supply-demand balance in the sector [1][3] Group 2 - The current PB-LF valuation of the basic chemical industry is close to the bottom levels seen in 2019 and 2024, indicating that the sector is still undervalued [3] - The chemical industry is expected to see a continuous improvement in supply-demand dynamics, with a potential upward trend in industry prosperity [3] - Analysts suggest that the chemical sector may experience a rebound starting in 2026, driven by improved domestic demand and supply-side adjustments [3] Group 3 - The chemical ETF (516020) tracks the CSI segmented chemical industry index, covering various sub-sectors, with nearly 50% of its holdings in large-cap leading stocks [4] - Investors can also access the chemical ETF through linked funds, providing a more efficient way to invest in the chemical sector [4]

Core Viewpoint - The A-share market shows upward movement, particularly in the petrochemical sector, with significant inflows into related ETFs, indicating a positive investment sentiment in the industry [1]. Industry Summary - The China Chemical Raw Materials and Chemical Products Manufacturing fixed asset investment decreased by 5.6% year-on-year from January to September 2025, marking a decline not seen since 2020 [1]. - Capital expenditure for listed companies in the basic chemical industry in the first half of 2025 was approximately 124.1 billion, a year-on-year decrease of 12.5% [1]. - The total amount of ongoing construction projects at the end of the first half of 2025 was about 397.9 billion, down 12.2% year-on-year [1]. - Despite the reduction in capital expenditure, the gradual recovery in demand is expected to improve the supply-demand dynamics in the chemical industry, leading to a potential increase in industry prosperity [1]. Company Summary - The Petrochemical ETF (159731) has seen a net inflow of 93.24 million over three consecutive days, reflecting strong investor interest [1]. - The Basic Chemical sector accounts for 61.93% of the Shenwan first-level industry distribution within the Petrochemical ETF, while the Oil and Petrochemical sector represents 30.84% [1]. - The top ten weighted stocks in the index include Wanhu Chemical, China Petroleum, Salt Lake Co., China Petrochemical, China National Offshore Oil, Juhua Co., Cangge Mining, Jinfat Technology, Hualu Hengsheng, and Baofeng Energy, collectively accounting for 55.12% of the index [1].