Trading volume hits its lowest point of the year! The hidden concerns behind the Shanghai Composite Index's return to 3,900 points

Ask AI · How Can China’s Innovative Drug Companies Accelerate Their Overseas Expansion to Reflect Global Competitiveness?

Full-Text Highlights: Today, the Shanghai Composite rose 0.63% to reclaim the 3,900-point level. The Shenzhen Component gained 1.13%, with turnover of 1.86 trillion, hitting a new intra-year low. More than 4,300 stocks advanced. Pharmaceutical and biologicals, non-ferrous metals, and basic chemicals led the gains, corresponding to three key logics: accelerating overseas expansion for innovative drugs, disruptions in lithium-mine supply, and cost-driven momentum in the chemicals sector. For the short term, we need to be alert to the rally on shrinking volume; in the medium to long term, focus on high-quality leading companies with strong earnings certainty.

For A-shares on March 27, a slight bit of warmth has reached the market. By the close, the Shanghai Composite successfully reclaimed the level above 3,900 points, finishing up 0.63% at 3,913.72. The Shenzhen Component and the ChiNext Index rose 1.13% and 0.71%, respectively. More than 4,300 stocks across the market were higher, and the money-making effect was quite strong. However, one signal worth noting is that the full-day trading value was 1.86 trillion yuan, down 93.2 billion yuan from the previous trading day, marking a new intra-year low. A rally on shrinking volume suggests that market sentiment has warmed, but the willingness of incremental capital to enter remains cautious; chasing gains still requires one more degree of冷静.

Looking at sectors, pharmaceutical and biologicals, non-ferrous metals, and basic chemicals have become the three main sector leaders today, with gains of 3.7%, 2.88%, and 2.55%, respectively. Meanwhile, sectors such as utilities, communications, and banks saw adjustments. This kind of divergence is not coincidental—there are clear event-driven logics behind it.

First, let’s look at lithium mining and lithium batteries. The direct catalyst is the continued escalation of Zimbabwe’s lithium mine export ban. As a globally important lithium supply country, the duration of its export ban has exceeded market expectations. Even if exports resume later, transporting lithium concentrate back to China still requires a certain amount of time. In the short term, the supply shortage pattern is unlikely to be quickly reversed. On top of that, the market remains optimistic about downstream energy storage and electric vehicle demand. As a result, the lithium battery sector surged on the news. Rongjie Co., Ltd. secured four consecutive daily limit-ups, while several other companies—including Jiangte Electric, and Shengxin Lithium Energy—also hit the daily limit. At its core, this is a supply-contraction rally driven by geopolitical policy.

Next, consider the basic chemicals sector. Entering March, geopolitical conditions suddenly tightened. Coupled with disruption to shipping through the Strait of Hormuz, international crude oil prices kept rising, directly pushing up costs across the chemicals industry chain. Products with relatively high import dependency—such as methanol and ethylene glycol—received some support as reduced import expectations formed due to transportation disruptions. Data shows that in the Southwest market, methanol prices rose 38.9% from late February, reaching the highest level in nearly three years. This is a typical cost-driven upswing; the outlook afterward depends on changes in upstream prices and the recovery of domestic demand.

Finally, it’s the innovative drug sector. In 2026, China’s innovative drug “overseas expansion BD” has continued its strong momentum, showing a “volume-and-price rising together” trend. According to statistics, from early 2026 through February 25, the industry has already seen 44 outbound licensing transactions, with a total deal value of $5.3276 billion—already more than one-third of the total for all of 2025. Recently, OuroMedicines and Gilead reached a $2.175 billion M&A agreement. Its core assets come from Connova, once again highlighting the global competitiveness of China’s innovative drug assets. Companies such as Huanling Pharmaceutical released positive announcements, stoking bullish sentiment across the entire sector. Nearly 10 stocks—including Sinopharm GenScript? Wait—no: Chuangyan? (昭衍新药、美诺华 etc.)—such as Simcere? Actually these names are already given: Chao Yan? In any case, companies including Chengyang XinYao (昭衍新药) and Minerva? (美诺华) saw near 10 stocks hit limit-ups. This is a real reflection that China’s pharmaceutical companies’ R&D strength has earned global recognition, and the industry logic is undergoing a qualitative change.

In addition, there have also been positive signals from the electronics industry. With AI-side demand boosting momentum and contract manufacturing capacity tightening, the semiconductor price hike line may be fully underway. International analog champions such as STMicroelectronics and ADI have issued price-increase letters, and domestic players like Jingfeng? (晶丰明源) and NanoSemi? (纳芯微) have also followed suit with price adjustments. With both rising costs and improving demand, it is expected that analog chips may enter a period of broad price increases.

Looking ahead, in the short term, after earlier market turbulence, the market appears to stabilize and rebound. However, the signal of trading value hitting an intra-year low is worth caution. Geopolitical conditions are not yet fully clear; external disruptions may still hit market sentiment. The willingness to chase gains is not strong, reflecting a cautious mindset of capital around key levels. Still, the room for the market to fall sharply further is relatively limited. The bottoming process is unlikely to happen overnight; after shrinking volume, the index will likely continue to fluctuate repeatedly and consolidate support — this is highly likely. In terms of trading, for today’s surging hot sectors, it is not advisable to chase blindly; it’s better to wait patiently for opportunities to build positions after pullbacks.

In medium- to long-term strategy, the main disruptions facing today’s A-shares are largely spillover from overseas sentiment rather than problems in domestic fundamentals. The policy tone of supporting growth has not loosened, forming a long-term “safety cushion” for the market. The core foundation supporting a favorable long-term outlook for A-shares has not wavered. Changes in the market’s operating mechanism and the evolution of investor composition give it, compared with the past, better conditions to form a “steady-but-advancing” pattern.

For allocation, you can focus on three main themes: First, resource stocks that benefit from supply constraints and the price-increase logic. With geopolitical risk premiums continuously layered on top of domestic replenishment demand, areas such as non-ferrous metals and chemicals still have support. Second, AI infrastructure with independently improving industry conditions, including computing power, data centers, and power-supply supporting facilities—areas supported by both policy-driven and industry-trend drivers. Third, the new energy sector that has undergone long-term adjustments. Against the backdrop of strengthened energy-transition targets in the “15th Five-Year Plan and the 5-year period beyond” (十五五) era, areas such as energy storage and lithium batteries have a dual logic of long-term policy backing and demand growth. In addition, the innovative drug sector’s value-for-money is also becoming more apparent under the dual drivers of a qualitative change in industry logic and earnings validation.

The current market is still in a period of high volatility. In this stage, making prudent judgments based on fundamentals and maintaining balanced allocations may be more important than chasing short-term hot spots.

Note: The market involves risks; investment involves caution. The content of this article is compiled based on publicly available information and does not constitute any investment advice.

Author statement: Personal views are provided for reference only