Institutions Bullish on Market Allocation Opportunities; Artificial Intelligence Sector 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 Market 50 Index rose 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 rally? Industry analysts point out that launching a trend-based new market cycle typically requires three key elements: an oversold market environment, ample capital inflows, and reasonable valuation levels.

Data shows that recent deep market corrections have brought some indices close to their extreme lows in this adjustment cycle, indicating that the downside space has significantly narrowed and technical rebounds are now preliminarily supported.

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%. In this cycle, it 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 extreme, dropping from 1,575.45 points to 1,249.01 points, with a maximum retracement of 20.72%, exceeding the maximum 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 consensus forecasts for 2026 net profits, the PE ratio is about 27 times; for the STAR 50 Index, based on forecasts for 2026 and 2027 net profits, the PE ratios are 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 People’s Bank of China held an expanded meeting emphasizing the need to firmly maintain the stable operation of financial markets such as stocks, bonds, and foreign exchange. In the medium term, China’s new economy remains stable and improving, and external shocks may present better allocation opportunities.

Guoxin Securities believes that during 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 real industrial policies and fundamentals, and after adjustments, are more likely to lead the market out of a new cycle.

If a rally is expected, which directions will be the main focus? In recent years, the structural differentiation of the A-share market has become increasingly prominent. Overall, the main narratives in the current A-share market still revolve around three themes—hard technology led by AI, resource stocks, and high-dividend assets. Among these, the high prosperity of the AI industry is undoubtedly the market’s absolute focus, and the significant rebound in related sectors on March 24 reflects strong capital confidence in this direction.

High-quality tech stocks that have experienced substantial price corrections are expected to outperform the market in the future. According to Securities Times Data Treasure, among stocks rated by five or more institutions and with recent prices down more than 20% from the year’s high, 28 tech-related stocks meet two conditions: median net profit attributable to parent in 2025 annual reports, quick reports, or forecasts increased by over 50% year-on-year; and forecasted 2026 PE ratios below 60.

The stock with the lowest forecasted PE ratio is Industrial Fuxin, at less than 16 times. Cinda Securities states that Industrial Fuxin 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 space remains broad.

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

(Data provided by the Securities Times Central Database)