Preface

The financial markets are abuzz with activity as the first trading day of September sees a significant surge in gold prices alongside promising movements in A-share gold and non-ferrous metal sectors. Investors are keenly eyeing the prospects following Goldman's optimistic revision of Cambricon's target price to 2,104 RMB. This article offers a comprehensive analysis of these dynamic shifts and their implications on different market sectors.

Lazy bag

Gold prices are on the rise with A-share market boosts in precious metals. Goldman revises Cambricon's target price, attracting investor interest. Key drivers include Fed policy shifts.

Main Body

In an unexpected turn, the first trading day of September witnessed the A-share market's major indices opening higher. By midday, the Shanghai Composite Index had gained 0.12%, with the Shenzhen Component and ChiNext indices increasing by 0.11% and 0.55%, respectively. Despite the promising start, the North Exchange 50 index showed a decline, dropping by 0.76%.

The trading volume during the first half of the day across the Shanghai, Shenzhen, and Beijing stock exchanges totaled 18,465 billion RMB, marking a reduction of 287 billion RMB from the previous day and showcasing a rise in more than 3,100 individual stocks.

Particularly noteworthy was the advancement in the gold and non-ferrous metals sectors. While all eyes were on these commodities, the thematic sectors such as precious metals, innovative drugs, and cinema chains also climbed, whereas insurance, military equipment, and securities sectors faced downward pressure.

Gold companies recorded substantial gains, led by stocks like Western Gold and Hunan Gold reaching their upper price limits. The international gold market mirrored these domestic movements, with spot gold peaking at $3,485 per ounce, a high not seen since late April. The past month of August has been particularly favorable for the gold market, with the main contract prices for New York’s Commodity Exchange gold futures increasing by over 5%, heralding the best monthly performance since April this year.

Analysts from Bank of America identify two primary factors behind the burgeoning international gold prices: the strengthening expectations of Federal Reserve rate cuts and the recent events casting doubt on confidence in dollar assets following the dismissal of a Fed Board member.

Simultaneously, innovative drug stocks experienced mixed outcomes, characterized by significant movements in companies like Maiwei Biotech and Baihua Pharmaceutical, which closed at limit up. The cinema chain sector demonstrated robust activity as Wintime Holdings capped its board price limit, continuing the trend. In the semiconductors domain, Liangxin Chip and Yuanjie Technology saw substantial increases, with Huahong Company surging over 10% on resume trading.

The aerospace and military equipment sectors mostly adjusted downwards, with Chinese Aerospace, Chinese Satellite Communication, and China Aerospace Science and Technology leading the declines. The insurance sector also witnessed a downtrend, with New China Life, Ping An Insurance, and People's Insurance Company of China showing noticeable dips.

In recent developments, the A-share margin trading balance has continued to swell, achieving historic highs approaching 22,454.72 billion RMB across the Shanghai, Shenzhen, and Beijing exchanges as of August 29. Notably, the Shenzhen market recorded its highest ever margin trading balance at 10,971.74 billion RMB.

Contrary to some market rumors, Alibaba Cloud dispelled allegations of a shortfall in computational power related to the inquiry model and the supposed order increase for 150,000 Sihanox Cambricon Siwon 370 chips. Early on September 1, Alibaba Cloud categorically refuted the claims, affirming their commitment to domestic supply chain support through versatile chip usage but denied the specifics of the rumored procurement.

Indeed, shares of Cambricon faced a brief decline, with the price temporarily dipping by 8.96% but later stabilizing slightly by midday. Despite the market turbulence, Goldman Sachs expressed confidence in Cambricon's strong second-quarter performance, leading to an upward revision of the 12-month target price by 14.7% to 2,104 RMB. This marks the second time in a short span that Goldman Sachs has adjusted its target price for the company.

Key Insights Table