On August 20th, China's three major A-share indices opened higher collectively, with the market rallying in early trading before paring gains slightly, showing a pattern of "indices closing higher, stocks broadly rising, with pharma and gold leading the advance" in a rebound from oversold levels. As of the midday close, the Shanghai Composite Index rose 0.28% to 3,905.23 points, the Shenzhen Component Index gained 0.97% to 14,024.41 points, and the ChiNext Index advanced 1.03% to 3,509.44 points. Across the market, more than 4,300 stocks rose while approximately 1,000 fell, with over 80 stocks hitting the daily limit up. Total turnover for the Shanghai and Shenzhen markets reached approximately 1.37 trillion yuan in the morning session, down about 246.9 billion yuan from the previous trading day.
On the upside, sectors including pharma and biotech, precious metals, power grid equipment, and digital currency led the gains. On the downside, agriculture, banking, coal, and oil and gas sectors declined. Overall, driven by the rebound in US stocks overnight, a sharp surge in spot gold, and positive Phase III clinical results for the Merck and Moderna mRNA cancer vaccine, funds flowed into pharma and biotech, precious metals, and power grid equipment sectors, while agriculture and coal stocks that had strengthened against the trend the previous day pulled back.
1. Pharma and Biotech Sector Explodes Higher
The pharma and biotech sector opened higher and continued to climb, with vaccines, cellular immunotherapy, recombinant proteins, and gene editing leading the gains. Sanyuan Gene hit the 30% daily limit up, while CSPC Innovation, Porton Pharma, Genechem, CanSino Biologics, JenKem Technology, and MGI Tech all saw 20% limit-ups. Walvax Biotechnology and Zhifei Biologics also hit the 20% limit up, with Kangtai Biological rising over 10%.
In terms of news, Merck and Moderna announced on August 19th that the first Phase III trial (INTerpath-001) of their mRNA personalized cancer vaccine intismeran autogene produced initial positive results. The combination regimen significantly extended the time to recurrence after surgery in high-risk melanoma patients and reduced the risk of distant metastasis, marking the first success of an mRNA cancer vaccine in a large-scale Phase III trial. This drove Moderna shares up nearly 177% to $174.38 in US markets overnight, while Merck rose over 12%.
2. Power Grid Equipment Sector Shows Strong Activity
The power grid equipment sector strengthened on fluctuating trading, with Fengfan Stock hitting the daily limit up for its 8th time in 14 days, and Chint Electrics also hitting the limit up.
In terms of news, on August 18th, State Grid Corporation of China and China Southern Power Grid held talks in Guangzhou and signed the "Framework Agreement on Implementing the 15th Five-Year Plan and Accelerating New Power Grid Construction Strategic Cooperation." The two companies will jointly advance the construction of a new power system, major power projects, and a unified national electricity market. Rising expectations for grid investment drove the sector's activity.
3. Precious Metals Sector Opens Higher and Climbs
The precious metals sector led gains, with Xingye Yinxi hitting the daily limit up, Shandong Gold and Shengda Resources rising over 8%, Chifeng Gold gaining over 6%, and Zhongjin Gold and Western Gold following suit.
In terms of news, spot gold surged over 4% to return above $4,500. With US stocks closing higher overnight across all three major indices, the 30-year Treasury yield retreating from its 5.31% high, and the US dollar index weakening, rising gold prices lifted the precious metals sector.