Market Overview - The three major A-share indices collectively declined on the morning of the 26th, with the Shanghai Composite Index down 0.18%, the Shenzhen Component Index down 0.79%, and the ChiNext Index down 1.17% [2] - The total trading volume in the Shanghai, Shenzhen, and Beijing markets reached 1.3818 trillion yuan, a decrease of 174 billion yuan compared to the previous day [2] - Over 2,500 stocks in the market experienced declines [2] Sector Performance - The wind power equipment, chemical fiber, military equipment, agricultural chemicals, and soybean sectors showed the highest gains [2] - The gaming, copper cable high-speed connection, photolithography machine, liquid cooling server, and CPO concept stocks faced the largest declines [2] Notable Stocks - The wind power equipment sector saw significant strength, with Weili Transmission hitting the daily limit up, and stocks like Rihua Co., Dayue Shares, and Mingyang Smart Energy also reaching the daily limit [2] - The chemical fiber sector collectively rose, with Shunfa Co., New Fengming, and Sanfangxiang hitting the daily limit [2] - The military equipment sector experienced intraday gains, with Hangyu Technology, Hangya Technology, and Jialiqi leading the increases [2] - Other sectors such as semiconductors, soybeans, and agricultural chemicals also showed some fluctuations [2] Declining Sectors - The gaming sector underwent a collective adjustment, with Jibite hitting the daily limit down, and stocks like Kunlun Wanwei, Xinghui Entertainment, and Sanqi Interactive Entertainment also declining [2] - Photolithography concept stocks similarly retreated, with Kaimeteqi hitting the daily limit down, and Hongtian Shares, Wavelength Optoelectronics, and Lante Optics experiencing significant drops [2]

Group 1 - The core metal driving the global AI industry is tungsten, which is rarer than rare earth metals, with proven reserves of only 4.4 million tons compared to 120 million tons of rare earths, making tungsten's scarcity 25 times greater [1] - Tungsten prices have surged significantly this year, with domestic black tungsten concentrate prices reaching 211,000-212,000 yuan per ton, a 40% increase since the beginning of the year, outperforming gold's 33% increase [1][3] Group 2 - The demand for tungsten is driven by dual factors: the need for AI computing power and military applications, as tungsten is essential in manufacturing missiles, tanks, submarines, and satellites [3] - In the semiconductor industry, tungsten is used in advanced processes (3nm and below) for making transistors and in solid-state battery electrode materials, enhancing battery life by 10% [3] Group 3 - Companies with core advantages in tungsten resources are expected to see significant opportunities due to geopolitical tensions and rising price expectations [4] - Xiamen Tungsten Industry is the third-largest player, holding the largest tungsten smelting capacity globally, with an annual production capacity of 45,000 tons of ammonium paratungstate (APT), accounting for 36% of the domestic market [4] - Zhangyuan Tungsten Industry ranks among the top three in China with tungsten resource reserves of 94,600 tons and operates six mining rights and ten exploration rights [5] - The most promising company possesses Asia's largest tungsten mine with a resource value exceeding 38 billion yuan, currently undervalued at a market cap of around 6 billion yuan, and has significant foreign investment interest [5]

Core Viewpoint - The A-share market has shown strong performance, with the Shanghai Composite Index reaching a nearly ten-year high on August 18, 2023, indicating a reasonable overall valuation level despite increased trading volume potentially leading to short-term volatility [1][4]. Market Performance - On August 18, the Shanghai Composite Index rose by 0.85% to close at 3728 points, marking a new high since August 20, 2015, with the total market capitalization of A-shares surpassing 100 trillion yuan [2][4]. - The market has been strong since late June, with significant trading activity, as evidenced by daily trading volumes exceeding 2.8 trillion yuan [2][3]. Valuation Analysis - The current valuation metrics indicate that the A-share market is not overvalued, with the CSI 300 dynamic price-to-earnings ratio around 12.2 times, which is approximately at the 69th percentile historically since 2010 [4]. - The market capitalization to GDP ratio remains relatively low compared to other major global markets, and the total market capitalization to M2 ratio is about 33%, positioned at the 60th percentile historically [4]. Sector Performance - Growth-oriented sectors such as telecommunications, computers, electronics, media, and defense have shown strong gains, while sectors like real estate, oil and petrochemicals, and banking have underperformed [2][3]. - The market is currently experiencing a peak in earnings disclosures, with a focus on industries with favorable fundamentals [3]. Investment Recommendations - The company suggests focusing on sectors with high growth potential and performance validation, including AI/computing, innovative pharmaceuticals, military industry, and non-ferrous metals [5]. - Additionally, sectors benefiting from increased retail investment, such as brokerage and insurance, as well as those aligned with "anti-involution" policies like photovoltaics, are recommended for attention [5].