CMSC: Market rotation may accelerate in February. Industry positioning revolves around the layout of pro-cyclical and technology sectors.

The CMSC released a research report stating that looking ahead to February, the market is expected to be mainly volatile in the coming period, with post-holiday indexes likely to be stronger than pre-holiday indexes. After the disclosure of performance forecasts, the market will focus on trading around themes such as commercial aerospace, AI computing power and applications. Due to the spread of price increases, the market will also continue to trade in sectors such as petroleum, petrochemicals, building materials, steel, chemicals, and liquor. However, in an environment lacking net additions, rotation may accelerate, leading to increased trading difficulty. The overall style is expected to be relatively balanced, and style rotation may also accelerate. Key points from CMSC are as follows: Market outlook and core logic: Looking ahead to February, after the previous regulatory signal cooling and significant outflows from ETFs, the market is expected to be mainly volatile in the near future. With the long Chinese New Year holiday in February, before the holiday, due to the lack of clear catalysts with the long holiday, market activity is expected to further decrease. After the Chinese New Year, with the approaching of the two sessions, policy stimuli are expected to accelerate, and the indexes are expected to perform better. At the fundamental level, January and February are a period of data vacuum. Currently, the market is still focusing on improving trends brought about by marginal changes in the industrial end. Cyclical price increases, with AI chain represented by semiconductor optoelectronic modules, are still the focus of the market's prosperity trends. In terms of policy, as 2026 is the first year of the five-year plan coinciding with the year ending in six or one, and a year when policies are implemented, trading opportunities around policy implementation have been emerging one after another. In terms of liquidity, although there is a trend of accelerated inflow of resident incremental funds, significant reductions by important ETF investors have offset the inflow of incremental funds. And with the approach of the Chinese New Year, margin balances generally flow out. This makes it difficult for the pre-holiday liquidity situation to change significantly. After the new nomination of the Federal Reserve Chairman by Trump, the US dollar index rebounded, suppressing the inflow of funds into emerging markets. It is expected that with the return of funds, the liquidity situation will undergo greater changes. Overall, the market is expected to be mainly volatile in February, with post-holiday indexes likely to be stronger. In terms of key directions, the early price-rising categories are beginning to spread to petroleum, petrochemical, and food and beverage sectors, with continuous catalysts for AI and semiconductors, and the construction and building materials benefiting from key projects in the 15th Five-Year Plan. Accelerated rotation may be the most important feature of February. Style and sector allocation strategy: In terms of style, after entering February, considering that the market is still in the spring season rally stage, continued recommendation of growth style is advised, with the performance differences between large and small caps expected to converge, focusing on large caps before small caps. Recommended index combinations include: CSI 1000, ChiNext 50, CSI 300 Qualit, and CSI 800 Information, etc. In terms of sector selection, it is recommended to focus on cyclical and technology sectors, with additional focus on selected consumer sectors with the approach of the Chinese New Year and continued policy support. Typical industries include electronics (semiconductors), media (advertising, gaming, film and television), machinery (automation equipment, engineering machinery), power equipment (batteries, grid equipment, photovoltaic equipment), basic chemicals, and social services. Liquidity and supply-demand of funds: In February, incremental funds are expected to continue to flow in, with foreign capital expected to continue to flow in before the holiday, and financing expected to return after the holiday. In terms of macro liquidity, the concentrated issuance and payment of government bonds in January have exerted a certain drawdown effect on liquidity. The central bank has taken precise and effective hedging measures to supplement the funding gap through medium-term liquidity tools, and it is expected that the fund will continue to be stable and sufficient in February. On the external liquidity side, judging from Powell's policy stance, Powell, the new nominee for Federal Reserve Chairman, is more likely to adopt a moderate and gradual interest rate cut strategy, and is more inclined to coordinate interest rate cuts with balance sheet reduction to hedge the loose effect and avoid inflation rebound. Market expectations for interest rate cuts in 2026 have been revised upward from one to two times. In terms of stock market fund supply and demand, the stock market saw a net outflow of trackable funds in January, with margin financing being the main source of incremental funds and ETFs experiencing significant net redemptions. On the supply side of funds, the scale of new equity-fund-based funds has rebounded slightly, with size index ETFs represented by the SSE 300 experiencing significant net outflows, and risk appetite for financing funds rising with net inflows increasing. On the demand side of funds, the scale of net reduction by major shareholders has expanded; IPO issuance and refinancing scale have declined slightly, with demand size maintaining stability. Looking ahead to February, incremental funds are expected to continue to flow in, with foreign capital expected to continue to flow in before the holiday, and financing expected to return after the holiday. Medium-term prosperity and industry recommendations: With over half of the annual report performance forecasts released, attention is focused on sectors with higher growth rates. In terms of profitability, on one hand, the profit growth rate of industrial enterprises turned positive in December, but the new and old dynamics are still differentiated, and profit recovery is relatively slow; on the other hand, with over half of the 2025 annual report performance forecasts currently released, sectors with high profit growth rates or improvements are mainly concentrated in: some rising resource products (industrial metals, new materials, energy metals, precious metals, chemicals, etc.), TMT sectors catalyzed by AI prosperity (semiconductors, communication equipment, computer equipment, software development, etc.), mid-to-high-end manufacturing with export advantages (grid equipment, automation equipment, general equipment, automotive parts, etc.), and non-banking industries. In terms of prosperity, in January, high-prosperity areas are mainly concentrated in some resource products, public utilities, and information technology, with most industrial metals and chemical products in the resource products sector seeing price increases; the photovoltaic price index in the midstream manufacturing sector is trending upward, while automobile production and sales are slowing down. In the consumer service sector, profits from pig farming have improved, and the year-on-year decline in retail sales of the four major home appliances has narrowed; the real estate sector in finance has continued to be depressed, and gas prices in public utilities have risen. In February, the bank suggests industry positioning mainly around cyclical and technology sectors, as well as increased focus on selected consumer sectors. Typical industries include electronics (semiconductors), media (advertising, gaming, film and television), machinery (automation equipment, engineering machinery), power equipment (batteries, grid equipment, photovoltaic equipment), basic chemicals, and social services. Investing in trends and industries: OpenClaw shakes up the open source ecology, the OS Agent era pushes to the forefront. In early 2026, the tech community experienced a silent yet dramatic shake-up. Former Apple ecosystem renowned developer Peter Steinberger released the open-source project Clawdbot (later renamed OpenClaw). The core vision of this project is simple yet highly disruptive: if Claude is the smartest brain currently, then OpenClaw is the "hands" that operate the computer. OpenClaw is not another traditional desktop GUI client, it creatively transforms instant messaging software like WhatsApp and Telegram into users' "remote terminals." Users only need to send a natural language command on their phone - "check the server logs, restart if Nginx reports an error" - and the Mac at home will automatically wake up, execute, and provide feedback. This "digital employee" experience has quickly attracted over 110,000 GitHub stars in just a few weeks, making it a phenomenon in the open-source world. Behind this data reflects the desire of developers for high-authority AI Agents. Risk warning: Economic data falls short of expectations, policy understanding is not comprehensive, overseas policies may tighten more than expected.