Institutions Optimistic on Market Allocation Opportunities as Artificial Intelligence Attracts Fund Focus

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

Meanwhile, valuation levels 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, 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, the 2026 net profit forecast for the ChiNext Index implies a PE of about 27 times; for the STAR 50 Index, the 2026 and 2027 net profit forecasts suggest PE ratios of approximately 55 and 40 times, respectively.

Several institutions have issued positive outlooks for 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 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 amid short-term volatility, market styles may rebalance, with some undervalued “old economy” assets potentially gaining temporary favor. From a mid-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 out of a new trend.

If a market rally is expected, which directions will be the main focus? In recent years, the structural differentiation within the A-share market has become increasingly prominent. Overall, the main narratives currently 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. The significant rebound in related sectors on March 24 also 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 their peak this year, 28 tech stocks meet two key conditions: median net profit attributable to parent company in 2025 annual report, quick report, or forecast increased by over 50% year-on-year; and predicted 2026 PE ratio below 60 times.

The stock with the lowest predicted PE ratio is Industrial Fuzhou (601138), at less than 16 times. Cinda Securities states 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 capacity. 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 (601615) both have predicted 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, 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 line equipment offers significant growth potential.

(Edited by: Zhang Yang HN080)

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