Since the Federal Reserve cut interest rates in September, the technology growth style of the A-share market has continued to strengthen. As of September 26th, several semiconductor equipment related themed ETFs have performed well. Industry institutions analyze that new developments in the artificial intelligence (AI) industry are constantly emerging, and the structural market driven by growth styles is still ongoing. However, with the "pre holiday effect" of the National Day holiday, if there is no significant positive catalyst, the market may be mainly volatile in the near future.

At the same time as the valuation of the technology sector enters a high level, the internal rotation of the sector is also accelerating. Industry institutions suggest that the previous extreme structural differentiation and overly concentrated consensus in the market need to be digested and consolidated. In the current market driven by incremental funds and the prosperity of some industries, rotation is not simply based on valuation and the pursuit of odds in a "high cut low" manner. The main factor determining the winning rate of a sector is the certainty of its prosperity, rather than its position. Therefore, it is more important to base on the logic of prosperity and industry trends, and explore the "diffusion" of advantageous styles and mainline opportunities.

The growth style market of A-shares is still ongoing

Since the Federal Reserve's interest rate cut on September 18th, the A-share market has continued its previous style of technological growth. As of September 26th, the Sci Tech Innovation 50 Index has risen more than 5% in the range.

In terms of ETFs, ETFs that only track indices such as semiconductor materials and equipment, science and technology innovation semiconductor materials and equipment, and China Securities Semiconductor Manufacturing Co., Ltd. saw an increase of over 16% from September 18th to September 26th, ranking among the top in the market; Multiple ETFs tracking indices such as Sci Tech Innovation Chips, Chip Industry, State Owned Enterprise Digital Economy, and CSI Chips have also seen gains of over 8%. During this period, the performance of sectors such as big finance, robotics, pharmaceuticals, and consumer goods was relatively unsatisfactory, with many ETFs tracking only fintech, Hong Kong securities, Hong Kong Stock Connect non bank, science and technology innovation new drugs, robotics industry, and other indices falling more than 5%.

According to the analysis of China Post Securities Research Institute, the Fed's interest rate cut is more of a "platform" for the structural market of A-shares. Whether this drama can be performed well depends on whether further stimulus policies can emerge. The new developments in the current artificial intelligence industry are constantly emerging, and the structural market trend of A-shares' growth style may not have ended yet.

In the short term, Fuguo Fund believes that the Federal Reserve's resumption of interest rate cuts has given more confidence to the liquidity narrative. Currently, domestic economic data is still recovering, coupled with the "pre holiday effect" of the National Day holiday. If there are no more favorable measures to be further introduced, the market may be mainly volatile in the near future.

From a medium to long term perspective, with the steady advancement of important new quality productive forces such as artificial intelligence, consumer policies, "anti involution" policies, and their supporting demand side policies are gradually being implemented. Fuguo Fund stated that the foundation for A-share repair is expected to be further consolidated; Meanwhile, under the resonance of factors such as deposit relocation, foreign capital return, and financing funds, the upward trend of A-shares remains unchanged. The Federal Reserve's resumption of the interest rate cut cycle has opened up a resonance of loose policies, which will also provide a favorable liquidity environment for Hong Kong stocks. The attractiveness of Hong Kong stocks as a global valuation depression may continue to be highlighted.

The technology sector remains the core of the market trend

Recently, there have been more and more discussions on vigilance against the foam of technology sector valuation, "high cut low" and market diffusion in the market. Reflected in the market, the rotation of growth sectors has begun to accelerate, with semiconductor equipment, cloud computing, consumer electronics and other directions alternately showing upward trends in the past week.

Debon Fund believes that the recent significant strengthening of the A-share index is mainly due to institutional clustering and a large influx of financing funds. With the continuous promotion of financing portfolios, leverage risks have further increased, and moderate risk avoidance needs to be considered in the short term.

In the view of Huitianfu Fund, the previous extreme structural differentiation and overly concentrated consensus in the market need to be digested and consolidated. In the current market driven by incremental funds and the prosperity of some industries, rotation is not simply based on valuation position and the pursuit of odds in a "high cut low" situation. In the market environment where risk appetite is rising, the main factor determining the winning rate of a sector is the certainty of industry prosperity. It is recommended that investors base themselves on the logic of prosperity and industry trends, and explore the "diffusion" of advantageous styles and market mainline opportunities.

The research department of China International Capital Corporation (CICC) believes that investors' attention to the performance of the third quarter report is gradually increasing, and in the near future, they also need to pay attention to the direction of medium and long-term reforms, such as benefiting from supporting the construction of new quality productivity, green development, and expanding opening up.

Fuguo Fund suggests that opportunities in the following sectors should be focused on: firstly, the technology sector remains the core of the market, with a focus on AI, robotics, innovative drugs, etc; Secondly, non bank finance with strong market linkage is expected to continue to benefit; Thirdly, according to the policy pace, increase attention to service consumption with policy bias, as well as chemical, non-ferrous, and new energy sectors that benefit from the "anti internal competition" policy, liquidity environment, and manufacturing industry restoration.

In terms of Hong Kong stocks, Internet targets have recently attracted financial attention. Deppon Fund believes that in the case of high valuation in AI computing power direction, there is a possibility of diffusion of technology stock market. In the process of transmission from upstream to downstream, Internet giants may benefit from it. The strategy team of China Merchants Securities suggests paying attention to the Hong Kong insurance sector and high dividend varieties with significant market expectations. Some high-quality innovative pharmaceutical stocks that have oversold will also face opportunities for bottom-up layout.