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In the past week, the A-share market has shown significant strength, particularly within the technology sector, where a surge has been observed in the AI industry chainThis explosive growth spans from upstream computing power to downstream applications, triggering a wave of trading limits being hitConsequently, trading funds are increasingly channeling into tech stocks, underscoring a shift in investor focus.
Market analysts are noting that the current intensity of transactions within the technology sector is reaching historical highsAs it stands, the trading dynamics within this sector are expected to gradually pivot toward fundamental analysisBucking this trend is particularly promising, given that policies aimed at stabilizing growth continue to be enacted and a shift towards a more risk-tolerant investor psyche prevailsMany market watchers are optimistic that the A-shares will follow a sustained upward trajectory.
When it comes to the TMT (Technology, Media, and Telecommunications) sector, the level of transaction intensity has reached concerning levelsOver the past couple of years, this sector has consistently drawn market attention, particularly when its trading volume approaches 40% of the market’s total trading volumeHistorical patterns suggest that this threshold often correlates with a phase of correction or pullback in returnsYet, coming out of the Spring Festival in 2025, the TMT sector breached the 40% mark and has continued to hold at elevated levels, suggesting that the invisible constraints previously observed may no longer apply.
In a report, GF Securities asserts that with every new cycle in large technology industry trends, the proportion of TMT sector trading volume against total market transactions tends to significantly riseThis increase can largely be attributed to the growing number of constituent stocks and their increasing market capitalization, alongside a marked improvement in investors' expectations regarding fundamentals
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Their calculations suggest that the TMT sector currently accounts for around 44% of total trading volume, with historical data and comparative analysis against U.S. markets indicating that this could peak at 50% in this cycle.
Moreover, the emergence of DeepSeek has been pivotal in changing the prior two years' narrative of the TMT sector, which had been seen as lacking in fundamental supportThis development may be key to driving TMT trading volume higher stillLooking forward, the elevated intensity levels may persist, but the indicators of this intensity will lose some of their significanceFuture market behavior is expected to become increasingly dependent on observable fundamentals such as order volumes, product scale, sales figures, catalysts for market activity, and earnings growth.
Furthermore, industry experts at Industrial Securities contend that traditional emotional metrics such as “volume proportion,” “turnover rate,” and “crowding” are more applicable in sectors that exhibit relatively stable fundamentals and industrial logicHowever, significant shifts in an industry’s trend, lifecycle, or policy landscape could lead to a breaking down of these crowded trading patterns, potentially giving rise to new market trends.
This reality is set against the backdrop of the TMT sector’s considerable breadth, which includes everything from upstream hardware for computing power to midstream software services and downstream applicationsWhile the sector may show signs of localized “overheating” at times, opportunities that present strong cost-performance ratios can still be identified.
The inner workings of the technology sector may display divergence going forwardMinsheng Securities highlights the distinct stages of industrial development and shifting market participants as critical to the unfolding of a potentially differentiated performance driven by AIFor well-established internet giants, a revaluation of AI-related businesses is likely to lift overall valuations
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Conversely, new entrants may face the risk of participant reallocation or disappointing performance outcomes that could lead to valuation downgrades.
According to Dongwu Securities, the trading logic within the tech growth style has progressively shifted since November 2024, moving away from the earlier “overseas mapping” trend to a focus on domestic industrial trends.
Thanks to advantages such as a robust engineering labor force and a massive user base, China boasts a fertile environment for AI applicationsThe country also benefits from strong barriers in hardware manufacturing and software ecosystem developmentThus, Dongwu Securities expects that the rotation within current growth styles will increasingly favor developments that emphasize tangible advancements, event-driven catalysts, and ancillary industrial chains such as cloud computing, chip manufacturing, large model frameworks, robotics, and AI-integrated glassesFurthermore, transitions may occur whereby this tech growth focus periodically shifts from AI-centric investments to other areas such as new energy, aerospace information, and data resources.
Citic Securities notes that from an industrial logic standpoint, the extensive deployment and application of DeepSeek signify a critical transformation in the domestic AI landscape, moving beyond mere thematic representation to become a true industrial trendAs such, the high profitability and elasticity of larger market capitalization companies could diminish the appeal of smaller stocks that lack substantial earningsMoving forward, the market may focus on high-quality leading companies that genuinely reshape business models and unveil new revenue generations, gradually distancing themselves from mere conceptual speculation.
Amid these shifting dynamics, the current momentum of the spring market appears to be ongoingA consensus among institutions indicates that this trend is likely to continue, bolstered by supportive policies and the influx of capital spurred by positive earnings expectations.
According to Everbright Securities, sustained policy backing alongside a wealth effect driving capital inflow could further elevate market valuations
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