Huaxi: The spring offensive continues to deepen the investment opportunities related to the "two sessions"

Huaxi released a research report stating that the spring offensive continues, and it is digging deeper into investment opportunities related to the "Two Sessions" (annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference). In the short term, the independence of this round of structural technology market has weakened due to the impact of the sharp drop in US stocks and the US imposing additional tariffs. There is concern in the market about the crowded TMT (technology, media, and telecommunications) transactions, and some speculative funds may temporarily withdraw. It is recommended to focus on opportunities for supplementing the rise in the domestic demand direction that benefits from the "Two Sessions" policy. In the medium to long term, the current round of AI+ investment has shifted from overseas to the domestic AI industry chain. As the domestic AI industry accelerates its catch-up with overseas advancements, opportunities for investments in A-share domestic computing power, Siasun Robot & Automation, AI applications, and other directions are expected to continue spreading. In terms of industry allocation, focus on opportunities for supplementing the rise in the domestic demand direction that benefits from the "Two Sessions" policy, such as consumption, "Two heavy and two new" (focus on high-quality consumption and new infrastructure) sectors. In the medium to long term, assets related to the trend of the technology industry remain the main theme. Focus areas include AI+ (AI applications, humanoid Siasun Robot & Automation, smart driving, smart wearables, domestic computing power), low-altitude economy, domestic alternatives, and others. Market review: In February, the global equity markets presented an "East strong, West weak" pattern with the Chinese market experiencing a structural technology market rally, and the Hang Seng Technology Index once surged over 20%. Towards the end of the month, affected by the sharp fall in US technology stocks like Nvidia and the US tariff policy, profit-taking sentiments appeared in the previous technology sector, and some low positions in the cyclical and consumption sectors also saw temporary rises. In terms of fund flow, A-share margin financing funds continued to net buy for four consecutive weeks, while ETF funds continued to net redeem. In February, most of the bulk commodities fell, geopolitical tensions showed signs of easing, and international oil prices fluctuated downward recently. The following are the key points that the market has been focusing on recently: 1) Internationally, the US tariff policy has disrupted global market sentiment. On February 27th, the US announced that the decision to impose a 25% tariff on Canadian and Mexican products would take effect as scheduled on March 4th. On the same day, an additional 10% tariff was added to Chinese goods on top of the existing 10% tariff. The US tariff policy may be intensifying worries about stagflation in the US, with signs of an economic slowdown in February. Firstly, the US February Markit services PMI entered into contraction, secondly, the University of Michigan's US consumer confidence index dropped significantly, and at the same time, long-term inflation expectations reached the highest level since 1995. 2) The "Two Sessions" are scheduled for early March, and market expectations for macro policies have increased. According to the bank's statistics, since 2019, the A-share market's upward momentum during the "Two Sessions" period may be slowing down. After the conclusion of the "Two Sessions", the focus will once again shift to policy directions. For the 2025 "Two Sessions," the key points to focus on are expanding domestic demand, new high-quality production forces, and stabilizing the real estate and stock markets. To elaborate, stimulating consumption is the primary focus of this year's economic work, and boosting consumption is at the forefront of domestic demand; the General Secretary emphasized at a private enterprise symposium to "make efforts to promote technological innovation, cultivate new high-quality production forces, and make contributions to building a modern industrial system." This indicates that artificial intelligence, low-altitude economy, 6G, and other emerging industries and future industries remain key support directions; and on February 28th, the Central Political Bureau meeting mentioned once again "stabilize the real estate and stock markets," it is expected that real estate stabilization policies will be strengthened this year. 3) In the short term, the technology sector has seen increased volatility following overseas market fluctuations, and concerns about crowded TMT transactions in the market have intensified, leading to potential profit-taking. At the end of February, along with the sharp decline in US stocks, the Chinese equity markets also experienced volatility, and the independence of this round's structural technology market has weakened. On one hand, the market accumulated a lot of floating profits in the previous period, and the continuation of the short-term market relies on continuous breakthroughs in domestic and foreign industrial technologies; on the other hand, as March approaches, uncertainties such as the US tariff policy, Russia-Ukraine talks, and the "Two Sessions" policy are awaiting resolution, leading to the potential withdrawal of speculative funds in the short term. 4) In the medium to long term perspective, the core of technology growth track investments lies in the changing trends of the industry. "New quality bull" assets remain the main theme. The core of technology growth track investments lies in the changing trends of the industry, drawing a parallel to the first stage of the "smartphone industry chain" from 2009-2015 to the second stage of the "Internet+" rally. This round of AI+ investment has also shifted from overseas to the domestic AI industry chain. The second stage rally often lasts longer and involves a wider scope. As the domestic AI industry accelerates its catch-up with overseas advancements, opportunities for investments in A-share domestic computing power, Siasun Robot & Automation, AI applications, and other directions are expected to continue spreading. Risk warning: Macroeconomic fluctuations beyond expectations; overseas liquidity risks, geopolitical risks, etc.