Private placement allocation focuses on dual main lines: "Maintain proper balance when taking the bend"

After the Spring Festival holiday, the A-share market experienced a surge in both volume and price on February 24, with strong investor interest.

At the same time, underlying structural divergence is emerging. Resource sectors such as oil and gas, non-ferrous metals, and chemicals all advanced across the board, while themes like film and television theaters and AI applications saw significant pullbacks. This “ice and fire” pattern indicates that the A-share market, in its steady start to the Year of the Horse, harbors underlying disagreements. Several leading private equity firms told China Securities Journal that the first trading day of the Year of the Horse confirmed the optimistic expectations before the holiday, but market trends are gradually shifting. Investors need to recalibrate their strategies between the “technology” and “resources” sectors.

Clear dual-wheel driving features

“On the first trading day of the Year of the Horse, the A-share market showed a broad rally with all sectors opening higher and increasing in volume. Major indices like the Shanghai Composite rose simultaneously, and trading activity was notably active,” said Bao Xiaohui, Chairman of Changli Asset. He noted that, combined with the generally warm external markets during the Spring Festival and strong capital inflow expectations, the A-share performance largely aligned with market expectations.

Li Mingluo, investment manager at Cheese Fund, observed the dual-wheel driving pattern in the market—on February 24, a clear “resource + technology growth” dual-drive structure was evident. Resource sectors such as oil and gas, precious metals, and other commodities led gains, along with AI computing power, semiconductors, and robotics. Meanwhile, previously high-flying themes like film, short dramas, and gaming experienced some correction. “This performance basically fulfilled market expectations for a ‘red envelope rally’ before the holiday, driven mainly by overseas tech stocks rising during the holiday, geopolitical risks boosting safe-haven assets, and AI industry catalysts being released intensively.”

Ma Kewei, founder of Mingze Investment, believes that the index-level performance was largely in line with expectations, but the market structure showed significant divergence. “Tech growth sectors like humanoid robots, semiconductors, and AI applications performed relatively unevenly, falling short of expectations; meanwhile, resource sectors such as oil, precious metals, non-ferrous metals, and chemicals performed relatively stronger.”

“Such divergence did indeed exceed expectations,” said Li Rui (pseudonym), a mid-sized private fund manager in Shanghai, after the market closed. Although his managed products’ net values rose with the market, he was not entirely relaxed. During the morning session on February 24, he considered chasing a few strong-opening AI computing stocks but decided against it after seeing weakness in the media and entertainment sector. “In the end, I held back on placing those orders.”

Focusing on certain industry trends

In the face of broad fluctuations in overseas tech themes during the holiday and sharp price swings in precious metals and non-ferrous metals, private equity firms’ outlooks for the future market diverge into “bull” and “bear” camps.

Firms committed to the dual focus on technology and resources remain confident. Li Mingluo believes that amid sector differentiation and commodity price volatility, investment opportunities in the early part of the year may concentrate on industries with clear trends. “Currently, we favor two core logic points: first, AI computing power and hard tech, as global AI capital expenditure enters an upcycle, domestic demand for computing infrastructure is rigid, orders for core components like optical modules are full, and investment logic for semiconductor equipment and materials continues to strengthen; second, resources, as geopolitical risks support safe-haven assets like gold, and the global manufacturing cycle recovery drives structural demand for industrial metals, with supply-side constraints on major commodities like copper supporting price stability and potential increases.”

Ma Kewei also advocates a balanced approach of “high-quality growth on the left hand and large space tracks on the right.” He believes recent volatility in overseas tech stocks reflects a shift from “storytelling” to “performance” evaluation. Domestic opportunities will focus more on segments with visible orders and clear commercialization paths, such as robotics and domestic computing power. Under geopolitical risk support and expectations of global liquidity easing, resource sectors like precious metals, oil, non-ferrous metals, and chemicals currently have sustained upward momentum.

Some institutions remain cautious. Bao Xiaohui admits she prefers short-term opportunities in non-ferrous metals and oil & gas sectors and remains cautious on tech stocks. “Tech sectors have experienced significant volatility recently, with strong disagreements between bulls and bears. Although long-term, tech remains a promising sector, it’s not suitable for heavy positions at this stage.” She plans to wait until market sentiment stabilizes and trends become clearer before further evaluating tech stocks. Analysts believe that the current divergence in views on tech stocks essentially reflects a trade-off between “industry trends” and “valuation levels.” In this environment, balanced allocation may be the safer choice.

Kou Zhiwei, partner at Chongyang Investment, takes a different approach, focusing on overlooked areas. “We believe market opportunities are still structural. We prefer value stocks, especially those undervalued sectors that haven’t shown significant performance since September 2024, expecting mean reversion.” He also noted that recent market enthusiasm suggests limited room for correction.

Future strategies emphasize balanced offense and defense

In the face of market divergence, private equity firms generally adopt a “balanced allocation and flexible response” approach, with different tactical focuses.

Li Mingluo states he will follow a strategy of focusing on core assets and flexible positioning. “We plan to use a balanced approach with dual main lines, selecting core tech-focused funds like innovative index-enhanced funds, and allocating resources through funds related to commodities. We will patiently wait for profit-taking or short-term overbought conditions to subside, maintaining caution on highly rallied stocks.”

Kou Zhiwei remains optimistic about the overall market but adopts a cautious stance in operations. “Strong sectors like tech and non-ferrous metals are currently at high levels, and further upward breakthroughs in the short term are unlikely.” He plans to continue with a defensive strategy, waiting for value stocks to revert to their mean.

Regarding short-term position increases, Bao Xiaohui prefers to “wait and see, not rush to act.” “Overseas commodity prices rose during the holiday, and market sentiment will likely be released after A-shares open. Jumping in at this stage involves high risk. Sector rotation is rapid—whether AI, tech, or cyclical sectors—it’s hard to tell in one or two days. We prefer to let the market digest sentiment fully and wait for clearer trends.”

Ma Kewei says, “Although we still see tech stocks as the core theme for the year, positioning should be more discerning. Focus on companies with strong earnings support or clear industry trends, such as computing infrastructure, humanoid robots, and AI applications in industry and autonomous driving. Be cautious with themes driven purely by concepts that have already surged.”

Li Rui revealed that he adjusted his positions during the trading day on the 24th: “I sold some high-flying pure concept AI stocks in the morning and shifted part of the holdings to computing hardware with order support and non-ferrous ETFs, while keeping some cash for further market clarity.”

Overall, private equity views suggest that the early stage of the Year of the Horse will feature mainly structural opportunities in the A-share market. Beyond the “technology + resource” dual main lines, opportunities for valuation reversion in undervalued stocks and seasonal price increases driven by spring construction may also attract capital rotation. As one private equity professional put it, “The market in the Year of the Horse won’t run in a straight line; it’s about maintaining balance through the bends.”