Shanghai Composite Index reclaims 4100 points and rises above the 10-day moving average. Is the short-term stabilization confirmed? The latest analysis from the top ten funds.

On Monday, A-shares opened higher and continued to rise, with the Shanghai Composite Index returning to 4100 points and surpassing the 10-day moving average.

By the close, the Shanghai Composite rose 1.41% to 4123.09 points; the Sci-Tech Innovation 50 Index increased by 2.51%, the Shenzhen Component Index rose 2.17%, and the ChiNext Index gained 2.98%.

There are only 4 trading days left before the Spring Festival holiday. Can the A-share market maintain its strong momentum before the holiday? After-market interviews with ten public fund managers by The Paper revealed that most pointed out that the main reason for the tech sector’s rally on Monday was due to internal and external resonance. On one hand, the big gains in U.S. tech stocks last Friday boosted market sentiment; on the other hand, senior officials’ inspections of technological innovation work during the session further catalyzed market sentiment.

Many public funds believe that the short-term risk shocks have been sufficiently released, and the underlying logic of the year-end rally—such as stable fundamentals, favorable policy expectations, and ample liquidity—remains intact. The market is expected to usher in a new wave of bullish opportunities.

Nuonan Fund: Confidence in A-shares Continues to Recover and Warm Up

The main drivers of Monday’s market were twofold: first, senior officials inspected technological innovation work in Beijing. This news boosted investor enthusiasm for the tech sector, with media, communications equipment, internet services, small metals optical electronics, semiconductors, and software development leading gains. Second, liquidity in overseas markets has significantly improved.

Recently, risk appetite and liquidity in overseas markets have shown notable changes. Aside from short-term market fluctuations, two underlying trends are evident: one, the increasing urgency in Europe and the U.S. to shift from virtual to real assets, with key minerals and industrial chain security becoming priorities; the policy proposals of the newly nominated Federal Reserve Chair also reflect an urgent need to prevent capital from idle transfer and to lower real economy financing rates; two, disruptive innovations brought by AI are breaking down traditional monopolies and high-return barriers, with the software sector being the most affected recently, and industry anxiety rising sharply.

In contrast, China’s capital market has already priced in the “virtual to real” shift over the past few years and is now in the process of verifying and pricing “quality improvement and efficiency enhancement,” so there’s no need to worry about short-term market volatility.

At this stage, confidence in A-shares continues to recover and warm up, and the overall market remains in an environment of rising sentiment. Against this backdrop, attention can still be paid to “resources + traditional manufacturing,” non-bank financials, consumer chains, and real estate chains. For consumer chains, focus on duty-free, airlines, hotels, scenic spots, and freshly brewed tea drinks; for real estate, focus on high-quality developers and building materials.

Pengyang Fund: Optimistic about the “Consumption + Technology + Cycles” Three-Dimensional Allocation Strategy

On Monday, the A-share market rose amid multiple positive external and internal factors. In overseas markets, the Dow Jones Industrial Average broke through 50,000 points, with tech stocks like Nvidia soaring, significantly boosting global risk appetite; domestically, national leaders inspected technological innovation work, catalyzing activity in AI and other tech sectors; the State Council’s executive meeting discussed promoting effective investment, and the Ministry of Industry and Information Technology advanced the construction of “national computing power interconnection nodes,” injecting confidence into strategic emerging industries; additionally, the central bank’s continuous gold reserve purchases also help stabilize market expectations.

Looking ahead, we favor the “Consumption + Technology + Cycles” three-dimensional allocation strategy. The mid-term main theme is the consumer sector, supported by the Spring Festival peak season and policies like “Happy Shopping for the New Year,” with travel, food, and beverage segments expected to lead the “spring surge.”

Huitianfu Fund: The Phase of Largest Sentiment Shock Is Passing

Recently, the adjustment of global risk assets mainly stemmed from sentiment rather than fundamental or policy changes. The core logic supporting the year-end rally in China—“improving fundamentals, policy easing, and ample liquidity”—remains solid.

The previous adjustment has released certain risks, and the phase of maximum sentiment shock is passing. Global risk assets are gradually stabilizing, and sentiment indicators in A-shares and Hong Kong stocks also show the market has entered a valuation range with good cost performance.

Looking forward, as macro data from China and the U.S. are released and industry catalysts are implemented intensively, combined with the calendar effect of rising risk appetite and influx of new funds after the Spring Festival, the market environment is expected to turn positive.

Allocation can gradually shift toward the Spring Festival rally, focusing on three clues: first, AI hardware driven by overseas mapping in TMT sectors (North American computing chain, semiconductor industry chain); second, high-end manufacturing in new energy (batteries, energy storage, power grids, photovoltaics) and innovative drugs; third, domestically driven price-increase chains (chemical industry, building materials, steel). Industry themes such as AI applications (computers, media, humanoid robots) are expected to be catalyzed intensively in February, with reasonable crowding, making them worth increased attention.

CMB Fund: Market Likely to Enter a New Bullish Window

Looking ahead, the release of short-term risk shocks is relatively sufficient. The underlying logic of the current macroeconomic fundamentals, policy optimism, and ample liquidity remains, and the market is expected to open a new window for bullishness, with a focus on industry-driven growth themes.

In the future, some assets that have gained significant gains since the beginning of the year may experience corrections. Key allocation directions include: 1. Semiconductors and advanced manufacturing; 2. New energy; 3. Internet platforms and growth stocks, which are more sensitive to risk appetite changes, especially if overseas interest rate expectations ease, offering greater flexibility; 4. High-dividend assets like large-cap stocks, state-owned enterprises, and central enterprises, which still have defensive properties during volatile periods and can serve as “ballast” for funds.

Bosera Fund: Structural Shift in Market Direction Before the Holiday

In China’s equity market, structural differentiation is evident. Before the holiday, investors tend to favor industries with relatively stable performance and less affected by economic cycles during periods of macroeconomic data gaps or increased external uncertainties. The market’s driving logic is shifting from a broad liquidity easing expectation to seeking structural sectors with predictable performance and policy support.

Caitong Fund: Still Highly Optimistic About the Long-Term Trend of AI Industry

In terms of industry outlook, we remain highly optimistic about the long-term trend of AI. Currently, AI sector valuations are still within a reasonable range, with supply chains showing a “shrinking circle” pattern. Overseas clients demand high quality and stability, with rapid technological iteration, creating solid industry barriers. As AI applications continue to land overseas, the demand for computing power is growing exponentially—from training to inference, from text to video—the long-term space for infrastructure remains broad.

Additionally, the strength of companies’ ability to go global increasingly impacts their performance resilience. Those capable of integrating into the global industrial chain, especially overseas computing chains, are expected to continue gaining growth momentum.

Morgan Stanley Fund: Short-term Focus on Tech as the Preferred Strategy

The recent market performance has been driven by continued pressure on heavyweight stocks like financials, large resource commodities experiencing high volatility, and tech stocks declining overseas, making domestic demand sectors a safe haven that has outperformed in the past two weeks.

Looking ahead, a rotation pattern driven mainly by expectations is expected to continue. Most sectors lack sufficient performance verification, so short-term, tech stocks—especially those related to overseas computing power—are likely the best strategy, particularly to boost AI+ activity. Meanwhile, broad-based index ETFs have mostly stopped net selling, so previously oversold heavyweight sectors can also be considered.

Everbright Prudential Fund: Market Expected to Replenish Strength Amid Volatility

Since the beginning of the year, after a rapid rally, broad-based ETFs experienced large redemptions. Recent significant fluctuations in precious metals have impacted sentiment and liquidity, affecting index performance to some extent. Structurally, there has been a rotation from tech growth to domestic demand and consumption. As the index’s gains slow or even decline at high levels, the selling pressure on broad-based ETFs has weakened. Once risk appetite stabilizes, they may still support incremental funds, allowing the market to rebuild strength amid volatility.

From a style and industry perspective, looking at the mid-term quarterly outlook, based on domestic liquidity easing, seasonal effects, and the potential for new catalysts in AI applications and commercial aerospace around the Spring Festival, we remain optimistic about tech growth leading seasonal market trends. First, breakthroughs in AI applications and commercial aerospace are expected; second, after the pause in non-ferrous metals, focus on storage, new energy, and chemicals for investment value.

Haitong Fund: Early Spring Movement, Consider Buying on Dips

End-of-year funds are rushing to prepare for the spring surge, gradually raising the market bottom. In early January, the Shanghai Composite Index broke through the high point of the bull market since September 24, 2024, and market sentiment has improved accordingly.

Allocation ideas: First, focus on the main theme of technology, including semiconductors, computing power, gaming, and robotics. China insists on high-quality development, and new productive forces remain a policy priority, so focus on breakthroughs in domestic technological fields.

Second, related industries driven by external demand, such as chemicals, non-ferrous metals, and machinery. Although U.S.-China trade tensions persist, the most difficult period may be over, and Chinese companies’ overseas expansion remains a medium-term narrative.

Xinyuan Fund: Entering the Second Half of High-Volatility Deleveraging

Currently, the market is in a risk-off phase driven by high volatility in precious metals. The sudden high fluctuations in precious metals have effectively locked in or eliminated some liquidity.

In the short term, traders managing global asset allocation need to rebalance risk preferences across risk assets including U.S. stocks and commodities, reducing risk exposure and positions as necessary.

We are now in the second half of high-volatility deleveraging. From the actual trend of A-shares, a likely rebound will complete its first phase early this week (corresponding to precious metals’ rebound), but a second bottoming process is still needed.

Silver has found its first bottom near 64 yuan/ounce, which is favorable for reducing volatility in precious metals; A-shares, after peaking on February 4, have also begun a de-risking process, likely completing it early this week, entering the Spring Festival bonus period.

In terms of industry selection, focus on resilient sectors such as AI applications, semiconductors, and commercial aerospace. For industry allocation, consider: building materials, petroleum and petrochemicals, communications, defense and military industries, and computers; exercise caution with: diversified sectors, automobiles, pharmaceuticals, power equipment, new energy, and consumer services.

(Source: The Paper)