For stock investors, the analyst research reports from Jin Qilin offer authority, professionalism, timeliness, and comprehensiveness, helping you uncover potential thematic opportunities. Source: China Fund News. [Editor's Note] Blame Morgan Stanley's research report. China Fund News reporter Tyler. Hello everyone, today's market is hard to describe in a single word. As usual, let's continue to look for the reasons.

On October 8, the market fluctuated and adjusted throughout the day, with all three major indices falling collectively, and the STAR 50 Index dropping nearly 5%. As of the close, the Shanghai Composite Index fell 0.79%, the Shenzhen Component Index dropped 2.07%, and the ChiNext Index declined 3.15%. A total of 1,698 stocks rose across the two markets (including 45 hitting the daily limit up), while 3,748 stocks fell. Oil and gas stocks bucked the trend, with Shandong Molong hitting the daily limit up. The battery industry chain strengthened, with Lingpai Technology, Zizhu High-Tech, Yema Battery, and Shidai Wanheng hitting the daily limit up. The shipping sector moved higher, with Cosco Shipping Energy Transportation and China Merchants Energy Shipping hitting the daily limit up. The banking sector strengthened, with Bank of China, ICBC, and Bank of Hangzhou reaching record highs. On the downside, CPO concept stocks plunged, with Yuanjie Technology and Changguang Huaxin hitting the 20% daily limit down.

Next, let's analyze the reasons for today's overall decline. First, today's market, especially the technology sector — optical communication and optical module concept stocks — collectively plummeted, leading to a sharp drop in the ChiNext and STAR Market. The reason lies in a research report released by Morgan Stanley during the holiday period. The report suggested that the United States may in the future adjust optical module import rules to increase the share of American companies in the core component supply chain. The report argued that the Federal Communications Commission may impose restrictive measures on optical modules in the future, but unlike a complete import ban, the relevant policies may set a threshold for American component content, preserving access to the US market for products that meet the criteria. One potential plan is that if at least 65% of the value in the optical module bill of materials comes from American companies, the product may receive an exemption from the relevant import restrictions. The report suggested that this restriction may mainly be implemented starting with next-generation 3.2T high-speed optical modules, rather than directly targeting current 800G and 1.6T products. 3.2T optical modules are expected to begin ramping up in 2028 and enter broader deployment in 2029.

For companies such as Zhongji Innolight and Eoptolink, if potential rules allow assembled optical modules to qualify for the 65% American content exemption, finished product orders may not necessarily face a huge impact, but procurement costs and profit margins still carry risks. For companies such as Yuanjie Technology and Changguang Huaxin, the market is concerned that future opportunities for domestic lasers to enter the US high-end optical module supply chain may be squeezed. Regarding this matter, Suzhou Dongshan Precision Manufacturing also held a conference call. It mentioned that the so-called 65% American cost share restriction is merely a personal speculation by analysts based on automotive industry rules, with no official document to support it, and such cost controls do not fall within the FCC's statutory responsibilities. It has zero impact on the company's current business, and the company has multiple buffers to respond. Currently, the company's two core AI tracks — optical modules and PCB — are both highly prosperous, customer introduction is progressing smoothly, capacity and material reserves are sufficient, and the optical chip business accounts for a low proportion of profit. The stock price decline alongside the sector is a "mispricing" not supported by fundamentals.

Second, overseas markets were also unsettled. Asian markets and US stock futures collectively plunged. The crude oil market surged. In terms of news, reports said the White House has asked the Pentagon to draft plans for military strikes against Iran, and related actions could be implemented before the US midterm elections. In addition, storms caused some US oil production to shut down, which also pushed oil prices higher. At the same time, Iran-backed Houthi forces attacked two airports in Saudi Arabia, killing 3 people. The group has intensified attacks on Saudi Arabia while continuing to fight Saudi-backed forces in Yemen. That's all for today's analysis.

Sina statement: This news is reproduced from a Sina partner media outlet. Sina publishes this article for the purpose of conveying more information and does not mean it agrees with or confirms its views or descriptions. The article content is for reference only and does not constitute investment advice. Investors who act on this do so at their own risk.