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Affected by the sharp drop in the Nasdaq index of U.S. stocks overnight, Asian markets generally opened lower and fell throughout the day today. The Nikkei 225 index fell by more than 2%, and the South Korean Composite Index and MSCI Vietnam Index both fell by more than 1%.

The A-share market was not immune, with major indices such as the Shanghai Composite Index and Shenzhen Component Index all opening slightly lower. The ChiNext Index opened low and ended high, turning positive first and driving other indices to bottom out and rebound. The SSE 50 and CSI 300 also strengthened and turned positive near the midday close.

On the market, sectors such as telecommunications operations, electrical equipment, medicine, and petroleum were relatively strong, while sectors such as copper cable high-speed connections, AI mobile phones and PCs, mixed reality, and Apple concepts were among the top losers.

Vitamin prices and quantities are rising

Pharmaceutical stocks overall bucked the trend and strengthened in the morning, with vitamins leading the gains. The sector index opened low and then rebounded quickly, turning from a drop of more than 1% to a rise of nearly 1%, setting a one-month high.

Hehua shares rose to the daily limit, with the stock price hitting a one and a half month high. Half-day trading volume increased several times compared with yesterday's full-day trading volume. ST San Sheng opened at the daily limit, with 7 daily limits in the past 8 trading days. Zhejiang Medicine, Shengda Biopharma and others were among the top gainers.

With the increase in the proportion of industrialized farming, feed has become the largest consumer of vitamins. For example, more than 80% of the downstream demand for vitamin D3 is used in the feed industry. Since the beginning of this year, the profit of pig farming has gradually recovered, driving the demand for vitamins to improve, which in turn has led to a continuous increase in prices.

According to Baichuan Yingfu data, since the beginning of this year, the price of vitamin A has risen by 21.4%, vitamin E has risen by 25.4%, vitamin B1 has risen by 33.6%, vitamin B2 has risen by 5.7%, vitamin B6 has risen by 4.6%, and vitamin D3 has shown the strongest growth, with the price rising by 123.3% from the beginning of the year.

In addition, with the transfer of the vitamin industry to our country, China has become the world's major producer of vitamins. In 2023, China's vitamin production was about 434,000 tons, accounting for 84.40% of the global production.

According to data from the General Administration of Customs, vitamin exports increased significantly in the first quarter of this year, with exports of vitamin E, vitamin B1, vitamin B2 and vitamin C increasing by 36.7%, 73.0%, 104.4% and 33.1% year-on-year respectively.

The rise in both price and volume has led to a significant increase in the performance of vitamin-related listed companies in the first half of the year. Yuheng Pharmaceutical recently issued a notice of expected increase in its 2024 semi-annual report, predicting a net profit of 100 million to 130 million yuan in the first half of the year, a year-on-year increase of 253.99% to 360.19%.

Regarding the reasons for the performance growth, Yuheng Pharmaceuticals stated that its multivitamins for injection (12) were the only products selected in the centralized volume procurement of 19 provinces in Henan last year, and its sales volume in the first half of this year also achieved rapid growth. Yuheng Pharmaceuticals also stated during an institutional survey that the company's performance is expected to continue to have a good growth trend in the second half of this year.

Xinhecheng also announced that it expects to achieve a net profit of 2.077 billion yuan to 2.225 billion yuan in the first half of the year, a year-on-year increase of 40% to 50%. Xinhecheng said that during the reporting period, the sales volume and price of the main products of the company's nutritional products business segment increased compared with the same period last year, achieving performance growth.

Northbound funds net bought 25.1137 million yuan of Xinhecheng yesterday, increasing their holdings by about 1.23 million shares. Since the beginning of this year, northbound funds have increased their holdings of Xinhecheng shares from 99.48 million shares at the end of 2023 to 139 million shares at present, increasing their holdings by nearly 40 million shares.

Guohai Securities pointed out that the domestic feed demand has recovered and the export situation has improved, which has effectively promoted the digestion of domestic vitamin production capacity. The company is optimistic about the mid-term prosperity of the vitamin industry.

Oil stocks opened higher against the trend

Oil stocks opened higher against the trend in the morning, and the sector index rose by more than 1% at one point. Maohua Shihua opened at the upper limit price again today based on yesterday's upper limit, and then lifted the upper limit. As of the close, it still rose by 4.75%; PetroChina, Sinopec, and CNOOC all opened higher and closed higher.

The latest data from the U.S. Energy Information Administration shows that as of last weekend, the total strategic reserve crude oil inventory was 814 million barrels, down 4.22 million barrels from the previous week; commercial crude oil inventory was 440 million barrels, down 4.87 million barrels from the previous week. This is the third consecutive week that U.S. crude oil reserves have fallen, with a total decrease of more than 20 million barrels.

Influenced by this news, international crude oil prices rose sharply, with WTI crude oil rising by more than 2% during the day, breaking through $83 per barrel at one point, while Brent crude oil rose by 1.45%, breaking through $85 per barrel.

This morning, the main domestic crude oil futures contract opened higher and rose by 1.5% as of midday. The main futures contracts of low-sulfur oil, asphalt, fuel oil, etc. all rose by more than 1%.

However, investors should note that with the rapid growth of clean energy around the world, long-term demand for oil and other commodities is on a downward trend. The International Energy Agency recently lowered its forecast for oil demand growth next year and raised its forecast for oil supply, which could lead to an oversupply in the market, reinforcing the agency's expectation of a serious oversupply of oil in the next decade.

The International Energy Agency said that the growth forecast for oil demand next year will be lowered from 1 million barrels per day to 980,000 barrels per day, saying that total demand is now expected to average 104 million barrels per day. This year, driven by developing countries, oil demand growth is expected to be 970,000 barrels per day, slightly higher than the previous forecast of 960,000 barrels per day.

The China Petrochemical Economic and Technological Research Institute released the "China Energy Outlook 2060 (2024 Edition)" report, which also pointed out that my country's oil consumption will increase to 760 million tons in 2023, and is expected to peak at around 800 million tons around 2026, and drop to 280 million tons by 2060. As the development speed of new energy vehicles continues to exceed expectations, my country's oil consumption peak plateau period will be shortened to 3-5 years. Around 2030, the chemical raw material attributes of oil will surpass those of transportation fuel.

Everbright Securities believes that oil prices are expected to remain high due to geopolitical and demand factors, and the profitability of the natural gas industry chain is expected to increase due to demand recovery and market-oriented reforms, and it continues to be optimistic about the oil and gas industry chain. With the deepening of state-owned enterprise reform, market value management targets and "one profit and five rates" assessment are expected to enhance the capital market value of central enterprises. In addition, the low interest rate environment is expected to be maintained in 2024, and the value of high-dividend central enterprises such as petrochemicals is highlighted.

Editor: Peng Bo

Proofreading: Yang Lilin