A-share earthquake! Two plates broke out.

In early trading today, A-shares remained volatile. The Shanghai Composite Index rose step by step after gaining support at 3,200 points. The Shenzhen Component Index also gained support at around 10,000 points and strengthened. The Kechuang 50 Index changed from falling more than 2% to slightly floating red in intraday trading. As of midday, nearly 4,400 shares in the two cities rose, and the turnover approached one trillion yuan.

On the disk, AMC concept, national defense, banking, real estate and other sectors were among the top gainers, while public transportation, securities, daily chemicals and sub-new shares were among the top losers.

The AMC concept opened sharply higher in the morning, and the plate index once rose by nearly 5% in volume. It was sold all day before the half-day handover. Everbright Jiabao, Cinda Real Estate, Hyde shares and many other stocks have a daily limit, while Yilida, Shaanxi Guotou A and Huawen Group also have strong daily limit or rose by more than 10%.

From the news, Lan Foan, Minister of Finance, said at the press conference of the State Council Office last weekend that the Ministry of Finance will issue special treasury bonds to support large state-owned commercial banks to replenish their core Tier 1 capital, enhance their ability to resist risks and provide credit, and better serve the development of the real economy. This means that after a lapse of 26 years, large state-owned banks will receive capital injection from the special national debt of the Ministry of Finance.

Lan Foan also pointed out that a package of targeted incremental policy initiatives will be launched in the near future; The Ministry of Finance plans to increase the large-scale debt limit at one time, replace the hidden debts of local governments, and increase efforts to support local governments to resolve debt risks; There are other policy tools for countercyclical adjustment, such as the central government still has a large room for borrowing and deficit improvement.

Debt-to-equity swap, as a system to resolve bad debts, has become an important bad disposal method for financial asset management companies (AMC). At the same time, in recent years, with the improvement of AMC’s asset disposal methods and the continuous development of China’s capital market, the debt-to-equity swap assets held by AMC have also brought a lot of benefits to AMC.

According to the statistics of the State Financial Supervision and Administration Bureau, by the end of 2023, the overall balance of non-performing loans of banking financial institutions was 3.95 trillion yuan (the caliber of banking financial institutions includes commercial banks, rural credit cooperatives and other financial institutions that absorb public deposits and policy banks), the non-performing loan ratio was 1.62%, and the non-performing assets were disposed of 3 trillion yuan in the whole year.

CITIC Jiantou said that the positive impact of debt conversion on the economy is greater than the incremental stimulus. This marks the start of the central leverage, and it is also the long-awaited "central end" of the market. The loose linkage between central finance and currency is a liquidity "feast" for the market.

Military stocks collectively strengthened in the morning, and the sector index opened higher and higher. At one time, the intraday volume rose linearly by nearly 3%. Many shares such as AVIC Electric Testing, Northern Changlong and Yinbang have a daily limit of 20%, and more than 10 shares such as Hongxiang, Chenxi Airlines, Great Wall Military Industry and Stone Refining Airlines have a daily limit or have risen by more than 10%.

Large aircraft, integration of defense and civilian technologies, commercial aerospace, military information, satellite navigation and other related sectors also rose strongly, and Dahua Intelligent, Furi Electronics, Sundiro A, Baota Industry and other bulk daily limit.

Recently, the international situation has become increasingly severe, and the confrontation on the Korean Peninsula has escalated, while the Palestinian-Israeli conflict has intensified.

A few days ago, North Korea’s Defense Ministry said that the General Staff of the Korean People’s Army had issued operational preparation instructions on October 12, requiring the joint artillery units of the Korean People’s Army at the front line and the units undertaking important firepower tasks to make comprehensive shooting preparations. If it is confirmed that the ROK is provocative again, it must be cracked down immediately.

The DPRK Foreign Ministry stated that, following the 3rd and 9th of this month, South Korean drones flew over Pyongyang on the evening of 10th, dropping anti-DPRK leaflets. The penetration of Korean drones violated North Korea’s national sovereignty and security and violated international law. North Korea’s Ministry of National Defense, the General Staff Department and the military departments at all levels have begun preparations for various developments.

At the same time, South Korea’s Ministry of National Defense sent a short message to the media entitled "Related Position on North Korea’s Jin Yuzheng Talks" on the 13th, saying that South Korea issued a solemn warning to the DPRK that if North Korea infringes on the national security of South Korea, that day will be the day when the North Korean regime will be destroyed.

On the Palestinian-Israeli side, since the outbreak of a new round of conflict between Palestine and Israel in October last year, there is still no signal to stop the war, and multiple spillover effects have emerged. From the Palestinian-Israeli conflict, to lebanon war, to the Iranian missile attack on Israel, the situation in the Middle East continues to be tense.

Galaxy Securities pointed out that with the subsequent performance in the third quarter, the annual report has a long empty window, while the industry orders in the fourth quarter are gradually approaching, superimposed on the high prosperity expectation in 2025, the performance of the national defense military sector is expected to be significantly stronger than the broader market, and the beta opportunity is highlighted. Some companies have a low performance base in the third quarter of 2023, and the performance end in the third quarter of 2024 may have a year-on-year growth inflection point, realizing the reversal of the dilemma and the emergence of Alpha opportunities.