Host | Yin Xing
Optical Communication Leads the Way
Host: Last week, when Fan Zhou opened his mouth, the Shanghai Composite Index surprisingly reached around 4000 points despite appearing weak. At the same time, optical communication shone brightly this week, continuing to show a structure of accelerated upward movement against the trend. Let's have Fan Zhou share his views on the future of the index and hot topics.
Fan Zhou: Trading and forecasting are two different things. Trading is about how much you make up for the gaps, how much you sell when you reach 4000 points, and then gradually reduce your position as it goes higher. Forecasting is logically pushing out results without much pressure. So my forecasts are all about serving my own investments. You can't have discussions without conclusions. If this happens, then that; if that happens, then this—it's just a bunch of concepts with three scenarios. How do you trade like that?
Host: Didn't you say last time that you would reduce your position the first time at the gap of 3955 points, and then again when it reached 4000 points?
Fan Zhou: Yes, so it's not just that I simply predicted 4000 points, but that the prediction comes with an investment strategy. Similarly, I've been talking about optical communication for over half a year. I specifically mentioned it again last week. You can compare optical communication to the battery or photovoltaic sectors in 2021. At that time, these two sectors held on until early 2022 before breaking down. By then, the CSI 300 index had already dropped by 15%, while they rose over 60% against the trend. Recently, you can look at the SSE 50, which had a maximum drop of over 10%, but during the same period, the optical communication index rose by 20%. Isn't that a clear upward trend against the current situation? Of course, no sector can stand alone in a volatile trend, but core sectors can hold out until the moment all indices collapse. What about the others? Who else can hold on?
Host: It seems that innovative drugs were doing well last week.
Fan Zhou: But they fell apart this week, didn't they? However, their ability to remain strong for seven or eight days is already second only to optical communication in recent times. Then the chemical sector was strong for a day, with over 30 stocks hitting the limit up, but the next day it almost &#34;collapsed.&#34; By Thursday and Friday, it was PCB's turn to rise. This sector cannot be viewed in isolation; it is also part of the optical communication system. Because optical modules contain laser drivers, modulators, photodetectors, amplifiers, and other chips, the high-speed telecommunication signal interconnections between these chips completely rely on PCBs. In the end, it all circles back to optical communication.
Host: The way you put it, it seems that copper cables for high-speed connections also belong to optical communication.
Fan Zhou: Now you understand! It's all centered around optical communication. Other sectors have too poor sustainability to be worth looking at. Although sectors like innovative drugs and overseas reconstruction have not performed well, there are still targets within the model that have emerged, and they ultimately became the leaders of their sectors. So if there are signals, everyone should practice.
Host: For those who can still maintain the rhythm of continuous practice now, it will be hard not to succeed in the future.
Fan Zhou: The current market is not difficult to navigate; at least it is still consolidating at a high level. Once the market goes through a couple of rounds at high levels, it will face directional choices, and that will be the most uncomfortable time. As I said, this stage is about doing subtraction—don't increase your positions, don't go heavy
High Prosperity Industry Quarterly Reports Attract Attention
Host: This week, the regional situation has eased somewhat, but the market stumbles when it reaches 4000 points. Xiao Xiao, what issues does this market condition reflect?
Xiao Xiao: Historically, the second quarter's market is the hardest to navigate. In the past decade, the Shanghai Composite Index has only closed up in the second quarter in 2020, 2021, 2022, and 2025. Among these, 2020, 2022, and 2025 are typical cases of &#34;digging a pit before a rise.&#34; Even after the &#34;deep pit&#34; in 2025, the quarterly increase was only 3%. It is normal for Wednesday's significant rise to be hindered by the important half-year resistance line. Although regional conflicts have eased, the outlook remains unclear, with oil still hovering near the $100 high, showing only marginal improvement. After the &#34;spring plowing&#34; in March, the adjustment of market positions and structures is still incomplete. On the surface, apart from the strong performance of the optical communication and computing power sectors, other sectors like innovative drugs, lithium batteries, and power equipment can only be described as rotational performances, with the market continuously searching for new directions.
Host: The key is that there is no sustainability in the new directions.
Xiao Xiao: The April market is completely different from the theme-driven style of the first quarter, focusing mainly on the profit situation of high-prosperity industry quarterly reports. The good news is that this week, the Shanghai Composite Index has formed a trend golden cross underwater. Unless there is a fundamental change in the bull market environment, the bottoming process around 3800 points has basically taken shape.
An Excellent Defensive Sector
Host: With the external environment easing, tech stocks are stirring again. How do you see the sustainability?
Jiao Yang: I estimate that differentiation will begin next week.
Host: What do you mean? If there is differentiation, what aspects should we pay attention to later?
Jiao Yang: It is possible that the strongest tech branches will start to adjust later, such as optical communication. It's not that the fundamentals have no expectations; it's that they are going against the trend. After the ceasefire, they accelerated, and those who should have entered have already done so. Then what? If tech experiences fluctuations, we should first pay attention to those related to optical communication, but not to varieties that overdraw future performance for the next 2-3 years. We need to focus on those that have a solid and irreplaceable position in the optical communication sub-sector. This will continue to follow an independent trend slowly. Because the entire sector is unlikely to drop significantly, it will more likely experience wide fluctuations. During this process, it is often suitable for core varieties that are lagging in sub-sectors to rely on their fundamentals to gain strength.
Host: The overall index is unlikely to break through, right? How should we think about next week?
Jiao Yang: This week, the market was mainly influenced by emotions, but after the emotional phase passes, what is needed is defense. From a defensive perspective, I think pork might be a direction. Currently, pork prices are too low. The faster the prices drop, the shorter the time to find a bottom later, so every time there is a sell-off, it could become a good opportunity for funds to focus on the pork sector. From the general expectations of institutions, prices are expected to gradually stabilize in the second quarter and start to rise moderately in the third quarter. According to past pork cycles, stock prices usually start to move about two months ahead of pork prices, so from this perspective, it should be coming soon
(This article was published in the Securities Market Weekly on April 11, and the individual stocks mentioned are for analysis purposes only, not for investment advice.)

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This week, the Shanghai Composite Index fluctuated around 4000 points, with the optical communication sector performing strongly and rising against the trend. The host and Fan Zhou discussed the difference between trading and forecasting, emphasizing the importance of investment strategies. Optical communication was compared to the battery and photovoltaic sectors of 2021; despite the overall market fluctuations, the optical communication index still rose by 20%. Other sectors, such as innovative drugs and chemicals, performed poorly, and Fan Zhou pointed out that optical communication is a core sector, making it difficult for other sectors to sustain

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