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In the morning trading today, the Japanese stock market plummeted. As of press time, the Nikkei 225 index fell more than 1,000 points, a drop of more than 2.5%. SoftBank Group fell nearly 6%, and Toyota Motor fell nearly 4%. Yesterday, the Bank of Japan raised the interest rate to around 0.25% in its interest rate decision and announced a plan to reduce bond purchases.

A-shares continued yesterday's strong opening and slightly higher in the morning trading, and then fell back after a slight rise. The major stock indices fell slightly. The Shenzhen Component Index failed to attack 8,800 points and retreated to below 8,700 points to gain momentum. Trading volume in the two markets remained at a recent high.

On the market, sectors such as medicine, national defense and military industry, transportation equipment, and railway infrastructure led the gains, while sectors such as brewing, real estate, tourism, and daily chemical products led the losses.

Defense and military industries strengthen across the board

Defense and military industry stocks strengthened across the board in the morning, with the sector index rising for the fifth consecutive day, reaching its highest level in nearly two months.Hangxin Technology, Chunhui Intelligent Control and others rose by 20%; Aerospace Morning Light opened at the daily limit, and closed the board for the fifth consecutive day, with the share price hitting a nearly 7 and a half years high; Aerospace Changfeng also rose by the daily limit, and closed the board for the second consecutive day. More than 10 stocks such as Aerospace Hongtu and Aerospace Technology also rose by the daily limit or more than 10%.

Sub-sectors such as military-industrial informationization, ships, satellite navigation, and military-civilian integration all rose strongly, with StarNet Yuda, Daye Shares, Fengxing Shares, and Linzhou Heavy Machinery all hitting their daily limit.

A few days ago, Ismail Haniyeh, leader of the Political Bureau of the Palestinian Islamic Resistance Movement (Hamas), was assassinated in Tehran, causing the situation between Palestine and Israel to deteriorate again.

In addition, as my country's goal of celebrating the centenary of the founding of the People's Liberation Army in 2027 approaches, and as the 14th Five-Year Plan and the 15th Five-Year Plan converge, the market generally expects that my country's national defense and military modernization will accelerate further.

The "2024-2029 China Military Electronics Industry Market Panorama Survey and Development Prospects Forecast Report" released by the China Research Institute of Industry predicts that by 2025, the market size of my country's military electronics industry will exceed 500 billion yuan, with an annual compound growth rate of more than 9%.

Huaxi Securities believes that the current time point is similar to the end of the 13th Five-Year Plan. After the military reform from 2016 to 2017, orders started in 2018, and exploded in 2019 and 2020. At present, the factors suppressing the fundamentals of the military industry have been basically eliminated. Whether it is the upper personnel, procurement or order side, changes have occurred, and the industry turning point is about to appear.

Pharmaceutical stocks rose collectively

Pharmaceutical stocks collectively rose in the morning, with immunotherapy, vitamins, assisted reproduction, Helicobacter pylori and other sub-sectors all rising in large volume. Xiangxue Pharmaceutical opened with a 20% daily limit, closing the limit for the second consecutive day; Xinguang Pharmaceutical also closed the limit by 20cm in just about 8 minutes; Hehua shares closed the limit in seconds after opening, closing the limit for the third consecutive day, and Jianfeng Group also closed the limit strongly.

Pharmaceutical stocks in the Hong Kong stock market also followed suit and strengthened. As of press time, Metz Health soared more than 56% during intraday trading, Sinopharm-B rose as high as more than 21%, Dingdang Health once soared more than 25%, and Huakang Biomedicine, Chuangsheng Group-B, and Laika Pharmaceutical-B also rose sharply.

On July 30, Shanghai issued the "Several Opinions on Supporting the Innovation and Development of the Entire Chain of the Biomedicine Industry", launching 37 policy measures around key links such as R&D, clinical, review and approval, application promotion, industrialization, investment and financing, data resources, and internationalization, which will be implemented on August 1.

In addition, the Shanghai Data Exchange recently jointly organized the DSM series - Data Elements × Biomedicine Seminar and Biomedicine Industry Data Supply and Demand Matchmaking Meeting with Shanghai Pudong Life Science Industry Development Co., Ltd., China Construction Bank Shanghai Branch, and Flint Creation Technology, to discuss in depth how to use data to promote innovation in the biomedicine industry, the inclusion of corporate data assets and innovative applications, and other topics, to promote the circulation and transaction of data in the biomedicine industry.

Currently, there are nearly 200 data products in the medical and health field listed on the Shanghai Data Exchange. The main application scenarios include medical devices, smart diagnosis and treatment, health management, biomedicine, etc.

In the A-share market, as the market adjusts deeply, listed companies have launched buyback measures. According to Wind data, since July, more than 700 listed companies have disclosed buyback and progress announcements, with a total buyback amount of nearly 16 billion yuan. There are 72 companies with a buyback amount of more than 50 million yuan, of which the largest number is in the pharmaceutical and biological industry, with 18 companies.

Statistics also show that, as of now, 99 pharmaceutical companies have disclosed their mid-term performance forecasts. From the mid-term performance forecasts, 60 pharmaceutical companies have achieved positive growth in performance.

AVIC Securities believes that as the volume-based procurement of drugs and consumables continues to advance, companies with high safety margins, strong innovation capabilities, rich product pipelines and a good competitive landscape are expected to continue to benefit in the long term. It recommends continuing to focus on innovative drugs and the innovative drug industry chain, high-end medical devices, offline chain pharmacies, and medical consumption with scarcity and consumer attributes, while exploring second-tier blue chips with relatively low valuations.

Editor: Peng Bo

Proofreading: Li Lingfeng