A-share market rally drives equity fund rebound, broad-based ETF scale increases

As the A-share market staged a strong upward trend, equity funds also witnessed a significant rebound. Data from Wind shows that from February 6th to February 23rd, the Shanghai Composite Index closed higher for eight consecutive trading days, with a cumulative increase of 11.2%. During this period, several funds rebounded by more than 30%; and against the backdrop of the index's continuous rise, the scale of many broad-based ETFs also saw a substantial increase. From February 5th to February 23rd, the total scale of broad-based ETFs increased by approximately 226.458 billion yuan.

In response to the continuous market sentiment repair after the Spring Festival, the research department of Xingye Fund analyzed that there were continuous positive news before and after the Spring Festival holiday, including policies supporting the healthy development of the capital market, M1 and social financing exceeding expectations, and good travel and consumption data during the holiday, all of which boosted market enthusiasm. At the same time, there was an improvement in the capital side, with significant net inflows of funds from various dimensions such as broad-based ETFs, listed company buybacks, and foreign capital.

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Xingye Investment released a viewpoint stating that, looking at the recent fund trading structure, the activity level of A-shares is increasing, and market expectations and trading tendencies are positive. At the same time, the release of information such as listed companies' performance forecasts has also driven funds to actively lay out investment opportunities. The index has clearly repaired in the short term, and in the medium to long term, the valuation of the A-share market is still in a historically lower range, with the potential for a sustained rebound.

The scale of broad-based ETFs has increased significantly, thanks to the market's recovery. Funds have entered the market through ETFs, and the scale of many broad-based ETFs has increased significantly, especially the CSI 300 ETF, which has been a key target for capital inflows.

According to Wind statistics, as of February 23rd, the total scale of stock ETFs in the entire market reached 1.7625 trillion yuan, of which broad-based ETFs accounted for 1.1847 trillion yuan.

In particular, there are 26 ETFs tracking the CSI 300 Index, with a total net asset value scale of 524.6 billion yuan as of February 23rd. Specifically, there are three with a scale over 100 billion, namely, the Huatai-PineBridge CSI 300 ETF with the latest net asset value of 183.5 billion yuan, the E Fund CSI 300 ETF at 114.2 billion yuan, and the Harvest CSI 300 ETF at 100.2 billion yuan. In addition, the China AMC 300 ETF also reached a scale of 91.6 billion yuan.

Liu Jiayin, head of the index investment department of Harvest Fund, analyzed to Yicai that the rapid growth of broad-based ETFs is actually a reflection of the market's accelerated rotation and the demand for balanced allocation of funds. For example, broad-based ETFs such as the CSI 300 ETF have relatively balanced and diversified industry allocations in their benchmark indices. At the same time, funds buying broad-based ETFs during market downturns also, to some extent, indicate recognition of the investment value of high-quality assets after significant adjustments.

China AMC believes that recently, broad-based index funds represented by the Shanghai 50, CSI 300, and Zhongzheng 500 and 1000 have received a large amount of institutional capital layout. Long-term capital entering the market to lay out ETFs sends a positive signal to the market, which helps repair short-term market sentiment and improve risk appetite. The continuous entry of long-term institutional capital also helps to optimize the investor structure, guide market investment direction, and form a virtuous cycle of mutual promotion between the real economy and the capital market.Equity Funds See a Significant Rebound

The Shanghai and Shenzhen stock markets have continued to rebound around the Spring Festival, with equity funds following suit.

Specifically, during the two trading weeks from February 5th to February 23rd, there were 53 funds (only including primary codes) across the entire market that saw an increase in value of more than 20%.

In terms of news, Central Huijin Investment Limited (hereinafter referred to as "Central Huijin") announced on February 6th that it will expand the range of Exchange Traded Funds (ETFs) it will increase holdings in and will continue to increase the intensity and scale of these increases, resolutely maintaining the stable operation of the capital market.

If we start counting from February 6th, by February 23rd, 11 funds had an increase in value of over 30%. Among them, Penghua Carbon Neutrality Theme A, Penghua CSI 300 Hang Seng Hong Kong Emerging Growth A, and Western Lide New Power A were at the forefront, with cumulative increases of 37.59%, 35%, and 34.86% respectively. However, affected by the previous pullback, some funds have not yet been able to return to positive returns for the year to date.

Looking at the holdings, AI and technology growth directions are leading the charge. Stocks such as Zhejiang Headman and Best, which are heavily held by some funds, have rebounded by more than 50% from their lows.

The technology sector is driving the market significantly. Xingye Fund Research Department analysis shows that the AI sector has continued to lead recently, partly due to the industry being boosted by the release of the Sora model by OpenAI, and partly because the performance of overseas technology leaders has exceeded expectations, and increased capital expenditure has also raised expectations for AI-related sectors.

Fuguo Fund analysis states that the recent hotspots in the overseas technology sector have been intensively catalyzed, with the Sora representative of the Wen Sheng video AI large model continuously iterating its capabilities in text, image, and video fields, further broadening the downstream application scenarios of AI, thereby boosting the risk preference for related concept stocks in A-shares. Looking at the computing power industry chain, sub-segments such as optical modules can directly benefit from overseas computing power investments; and under the background of the AI wave and autonomous control, domestic computing power is expected to achieve accelerated growth. Looking at downstream applications, the current domestic AI applications are not as developed as overseas in terms of product quantity, category richness, and functionality. With the domestic large models working hard to catch up, and more and more AI large model filings being approved, domestic AI applications are expected to accelerate their development.

Yongying Fund believes that in terms of industry, technology and dividends can be focused on. For TMT, it is currently in the AI theme phase, focusing on infrastructure construction fields represented by operators and computing power, while also paying attention to the fermentation of AI application hot topics such as MR, humanoid robots, and autonomous driving. For the dividend industry, it is possible to select sub-segments based on the ideas of profit certainty, state-owned enterprise nature, and the potential increase in dividend rates.