Institutions Optimistic About Market Allocation Opportunities, Artificial Intelligence Direction Attracts Fund Concentration

Securities Times Reporter Chen Jiannan

On March 24, major A-share indices surged significantly, with the Shanghai Composite Index closing up 1.78%, approaching 3,900 points; the STAR 50 Index soared 2.33%, nearing 1,300 points.

After continuous adjustments, the market has experienced a strong recovery. Can this rebound mark the beginning of a new wave of market trends? Industry analysts point out that launching a new trend typically requires three key elements: an oversold market environment, ample capital inflows, and reasonable valuation levels.

Data shows that recent deep corrections have brought some indices close to their maximum decline during this adjustment cycle, indicating that the downside space has significantly narrowed and technical rebound conditions have initially formed.

Meanwhile, the valuations of the STAR Market and ChiNext Index have also fallen back to relatively low levels, further enhancing market safety margins.

Data indicates that the Shanghai Composite Index has experienced multiple short-term declines exceeding 10%. During this cycle, the index fell from above 4,197 points to below 3,800 points, with a decline of 9.6%.

The recent correction of the STAR 50 Index approached its maximum, dropping from 1,575.45 points to 1,249.01 points, with a maximum retracement of 20.72%, exceeding the largest decline from October to December 2025, and slightly below the maximum drop from February to April 2025.

Additionally, from a valuation perspective, the PE ratio of the ChiNext Index has also fallen to a relatively low level. According to institutional consensus forecasts, the 2026 net profit estimates for the Growth Enterprise Market (GEM) suggest a PE ratio of about 27 times; for the STAR 50 Index, forecasts for 2026 and 2027 net profits imply PE ratios of approximately 55 and 40 times, respectively.

Many institutions have expressed optimistic views on the current market. Bank of China International states that in the short term, there remains considerable uncertainty regarding the development of international conflicts. On March 18, the Party Committee of the People’s Bank of China held an expanded meeting emphasizing the firm maintenance of stable operation in financial markets such as stocks, bonds, and foreign exchange. In the medium term, China’s new economy is expected to remain stable and improve, and external shocks may present better allocation opportunities.

Guosen Securities believes that amid short-term volatility, market styles may rebalance, with some undervalued “old economy” assets gaining temporary favor. From a medium-term perspective, sectors representing economic transformation and safety, such as artificial intelligence (AI) and advanced manufacturing, remain core allocation areas. These sectors are supported by genuine industrial policies and fundamentals, and after adjustments, are more likely to lead the market to a new trend.

If a new trend is anticipated, what directions will the market focus on? In recent years, the structural differentiation within the A-share market has become increasingly prominent. Overall, the main narratives currently revolve around three themes: AI-driven hard technology, resource stocks, and high-dividend assets. Among these, the high prosperity of the AI industry is undoubtedly the market’s absolute focus. The significant rebound in related sectors on March 24 also reflects strong investor confidence in this direction.

High-quality tech stocks that have experienced substantial price corrections are expected to outperform the market going forward. According to Securities Times Data Treasure, among stocks rated by five or more institutions and with recent prices down over 20% from their peak this year, 28 tech-related stocks meet two key conditions: median net profit growth of over 50% in their 2025 annual report, quick report, or forecast; and an estimated 2026 PE ratio below 60.

The stock with the lowest forecasted PE ratio is Industrial Fuzhou, at less than 16 times. Cinda Securities notes that Industrial Fuzhou continues to benefit from the global AI computing power infrastructure cycle, with clear advantages in server system integration and large-scale manufacturing capabilities. As demand for AI servers and high-speed network equipment continues to grow, the company’s future growth potential remains broad.

Xianhui Technology and Mingyang Smart both have forecasted PE ratios below 20 times. Aijian Securities states that benefiting from the promising prospects of new energy vehicles and energy storage, with strong demand for structural parts and equipment, Xianhui Technology develops new structural parts, expanding into high-margin overseas markets, which is expected to boost profits. The company’s layout in solid-state battery dry-process roll pressing and complete line equipment offers significant growth potential.

(Data provided by Securities Times Central Database)

(Editor: Guo Jiandong)

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