Zhejiang Merchants Strategy: A-shares are building momentum and will reach new heights; it is recommended to focus on four major directions.

Core Points

Looking ahead, the Shanghai Composite Index may gradually stabilize after mid-March, with some growth indices stabilizing by the end of April. From a quarterly perspective, a “systematic slow bull” trend remains. It is expected that in the second half of Q2 2026 to Q3, the Shanghai Index may challenge the 0.809 quantile between 5178 and 2440. Regarding style rotation, mid-cap and large-cap stocks are favored, with a balanced focus on growth and value. Industry allocation strategies include “grasping both new and old energy sectors, and enhancing cyclical consumption,” recommending four main directions: strong performers in new energy, traditional industries likely to undergo value revaluation under HALO trading conditions, internal expansion of cyclical commodities, and segmentation within consumer goods. The theme emphasizes AI reshaping the value foundation, with attention to “HALO” trading and new opportunities for Token globalization.

Summary

1. Market Outlook: Building Momentum for Higher Levels

Considering factors such as international situation, economic cycles, domestic policies, capital flows, market sentiment, and broad-based valuation, we maintain a neutral optimistic view. Looking ahead, the Shanghai Index may stabilize gradually after mid-March, with some growth indices stabilizing by late April. The “systematic slow bull” trend persists, and in the second half of Q2 2026 to Q3, the Shanghai Index may challenge the 0.809 quantile between 5178 and 2440.

2. Style Rotation: Mid and Large Caps Lead, Balanced Growth and Value

1) CITIC Industry Style: Industry style “spread” converges, with cyclicals, HALO, and tech growth advancing together; cyclicals > consumption > stable ≈ growth > financials.

2) Market Capitalization Style: Public fund pricing power remains stable, global liquidity remains relatively loose, supporting mid- and large-cap styles, with mid-cap > large-cap > small-cap.

3) Valuation Style: Growth and value become more balanced, with more “scoring points” in Q2; CSI Growth ≈ CSI Value.

4) From a macro asset perspective: The gold-oil ratio, which was at a historical high, is converging back, suggesting A-shares’ style may tilt toward traditional industries.

3. Industry Allocation: Balancing Old and New Energy, Enhancing Cyclical Consumption

As the Shanghai Index builds momentum, industries are expected to undergo more comprehensive revaluation. Based on Q2 industry scoring and fundamentals, the strategy is “balancing both old and new energy sectors, with cyclical consumption adding sparkle.” Four key directions are recommended: 1) Strong performers in new energy, focusing on benefiting from “computing and electricity synergy” and supply-side clearing in power equipment (photovoltaic, wind power, lithium batteries); 2) Under HALO trading conditions, traditional industries may see value revaluation, emphasizing “heavy assets” such as power, telecom services, fiberglass, general steel, coke, gas, coal mining; and “high barriers” sectors like telecom services, power, and grid equipment; 3) Internal expansion of cyclical commodities, paying attention to relatively lagging basic chemicals, agriculture, forestry, animal husbandry, and fishery; 4) Segmented consumer goods, such as pharmaceuticals and biotech (innovative drugs) benefiting from economic upturns and catalysts in Q2, and consumer services with broad policy support and increased share of service consumption.

4. Thematic Investment: AI Reshaping the Value Foundation, New Opportunities in “HALO” Trading and Token Globalization

From the resource laws of the Industrial Revolution to AI-era power value restructuring, technological disruption, AI infrastructure demand, and macro environment jointly drive “HALO” strategies and investment opportunities in Token globalization under computing and electricity synergy. Additionally, attention is recommended for themes like Openclaw’s AI Agents, embodied intelligence, and solid-state batteries.

5. Risk Warning

Unexpected geopolitical risks; domestic economic recovery below expectations; model subjectivity; historical data does not predict future performance.

(Source: Zheshang Securities)