Zhongtai: How to interpret the market reaching new highs at the beginning of the year?

Zhongtai releases research report, stating that in the short term, the market may continue its upward trend with volatile trading. Investors can take advantage of buying opportunities on dips and focus on allocating value before the Spring Festival. From a sector allocation perspective, Siasun Robot & Automation has continued to attract net inflows of funds in this round of gains, with no significant deviation of funds in the sector's upward movement. The trend has not ended yet, making it the main focus for investors at the current stage. The commercial aerospace sector also shows strong inflow of funds, but the current trading congestion has reached historical highs. The sector may gradually transition from the initial bull phase to the second phase of "theme diffusion" in the market, requiring more attention to rhythm and differentiation in operations. In addition, signs of continuous fund inflows are also observed in areas such as controlled nuclear fusion, sports and consumer services, and non-ferrous metals. If there is a slight correction in the market in mid-January, the above sectors are likely to become key areas for structural positioning. The main points of Zhongtai are as follows: This week, the A-share market continued its strong upward trend, with impressive index performance, significant increase in trading volume, and noticeable improvement in profit-making effects. From the index perspective, major broad-based indexes generally rose, with the Wind Full A Index, CSI 300 Index, and CSI 2000 Index rising by 5.11%, 2.79%, and 6.54% respectively this week, highlighting their structural features. The Shanghai Composite Index rose by 3.82% this week, surpassing the 4100-point mark, reaching a near ten-year high, and recording a 16-day streak, indicating a significant trend. Driven by the New Year's "red envelope" market, trading in the market remained active, with the daily turnover of the Wind Full A Index gradually increasing to 2.85 trillion yuan, and the single-day turnover exceeding 3 trillion yuan on Friday, with an average daily turnover increase of about 34% compared to last week, reflecting a strong willingness of incremental funds to enter. At the stock level, market profit-taking effects recovered simultaneously, with the daily proportion of rising stocks in the Wind Full A Index averaging about 59.87% this week, indicating a significant increase in risk appetite compared to the previous period. In the new high market this week, with high market risk appetite and positive catalysts, technology continued to be a strong theme. From the industry perspective, the media (13.11%), computers (8.50%), and electronics (7.74%) were among the top gainers among the first-level industries classified by the Shanghai Stock Exchange. The Brain-Machine Interface Theme Index recorded a weekly increase of 18.95%, with several Internet platform theme indices such as Kuaishou, Pinduoduo, and Xiaohongshu all rising by more than 10% for the week. The Siasun Robot & Automation (6.67%) and Siasun Robot & Automation (4.91%) theme indices also saw strong upward movements, reflecting a clear diffusion effect within the technology theme. In addition to the technology sector, the defense industry and non-ferrous metals also provided significant support to the market. The defense industry posted a strong increase of 13.63% this week, partly due to the escalation of tensions between the U.S. and Iran, the strong performance of U.S. defense stocks, and the continuous warming of the commercial aerospace theme. Recently, the National Defense Science and Technology Bureau clarified its plans to promote commercial space, and with the intensive launch plans of leading industry enterprises, multiple positive factors drove the weekly increase in the commercial aerospace index to 13.82%. Meanwhile, precious metals and non-ferrous metals continued to rise, with the non-ferrous metals sector posting an 8.56% increase this week and maintaining its high level. Quantum materials, tungsten mining, and other sub-themes also recorded weekly increases of over 15%. Looking ahead, the trend evolution at the index level will be centered around volume performance, with the current uptrend likely to continue until there is a significant shrinkage in trading volume. The daily average turnover of the Wind Full A Index reached 2.85 trillion yuan this week, a 51.63% increase from the previous month's average, showing that the continuous increase in trading volume has broken through the bottleneck of the previous trading range, reflecting a clear increase in incremental capital entering the market and providing a solid foundation for the continuation of the market. From a structural point of view, the market is likely to continue to focus on two main themes: the transition in technology subsectors, and the expected increase in demand for resources and strategic reserves. First, within the technology theme, funds may further transition to subsectors that are less crowded. Second, the resource and material sectors that have demand growth or strategic reserve logic are still worth paying attention to. Risk Warning: Global liquidity tightening beyond expectations, complexity of market dynamics beyond expectations, complexity of policy changes beyond expectations, etc.