Year of Horse’s first trading day sees auspicious start; higher risk appetite
While the A-share market performed strongly on the first trading day of the Year of the Horse, it is likely to gallop forward even further in the following months, mainly driven by a more amiable domestic macro environment and the development of emerging technologies, experts said.
After the extended Spring Festival break, the benchmark Shanghai Composite Index gained 0.87 percent to close at 4117.41 points on Tuesday, while the Shenzhen Component Index jumped 1.36 percent. The tech-heavy ChiNext in Shenzhen also added 0.99 percent. Total trading value on the Shanghai, Shenzhen and Beijing bourses amounted over 2.2 trillion yuan ($319 billion), up nearly 11 percent from the previous trading day.
Oil and gas extraction companies as well as precious metal enterprises contributed the most to the Tuesday rally, with the former reporting an average 7.53 percent price increase and the latter up by 7.01 percent on average.
Uncertainties in the external market have buoyed the performance of the above A-share sectors. The twists and turns in the US-Iran talks have pushed up oil prices, and uncertainty in Washington’s tariff policies may escalate the risk-averse sentiment, resulting in higher precious metal prices, said Xia Fanjie, a strategist at China Securities.
The A-share market is likely to rise further after the Chinese New Year while short-term volatility may not be avoidable, said Yang Chao, chief strategist at China Galaxy Securities. Market anticipation of more supportive government policies may serve as the core driver of a bull market, which can be further sustained by ample market liquidity and development of emerging industries, Yang said.
As the A-share market had already seen adjustments before the holiday when overseas assets underwent rearrangements, odds are high that the Chinese stock market will see gains after the country gets fully back to work following the long break, said Zhang Qiyao, chief strategist at Industrial Securities.
Higher risk appetite, coupled with various supportive macroeconomic and industrial policies, will lead to higher readings of the benchmark A-share indexes. In light of tech giants’ significantly rising capital expenditures and the rapid evolution of artificial intelligence models, investors are urged to focus on so-called “pan-AI assets”, including companies specializing in computing infrastructures and AI commercialization, Zhang said.
In particular, investment opportunities may lie in optical modules, energy storage, power grids and leading storage companies, which are integral to computing infrastructures. Humanoid robots, autopilot and consumer electronics companies may benefit from a wider AI commercialization, he added.
Liu Xiaoyao, computer industry analyst at Kaiyuan Securities, also holds a positive outlook on the AI sector this year, saying that a “Deep-Seek moment” may be anticipated among multimodal companies. Game, marketing, film and TV-related firms are likely to prosper amid enhanced multimodal capabilities.
The ongoing market rebalancing across the globe is mainly determined by AI’s growing influence against the backdrop of divergent monetary policies and other moves adopted by major economies, said experts at Sinolink Securities. Investment activities worldwide, which were mainly driven by AI, have now expanded to sectors more closely related to the real economy. The path of US interest rate cuts is expected to be relatively smooth. All these will provide an amiable environment for the recovery of the global manufacturing cycle.
During this process, Chinese assets are likely to be reevaluated, boosting the return of capital flow. This will in turn facilitate China’s domestic consumption, they added.
