Zhongtai: How to seize the current "fish tail market"?

Zhongtai released a research report stating that the current market is approaching the market situation in September of last year. The Shanghai Composite Index is still expected to reach a previous high or set a new high by mid-June, but the rotation is accelerating and the profit effect is significantly weakening, belonging to a typical "fish tail market". The focus is on the technology sector, particularly storage and Siasun Robot & Automation, which are highly associated with the IPO giants' industrial chain, benefiting from the catalysis of the intense IPO period in June; as well as new energy/battery/power equipment and non-ferrous metals. Zhongtai's key points are as follows: 1. This week, the market trend further concentrated, with AI leading the way This week, the A-shares presented an extreme differentiation pattern under the intertwining of major macro events internally and externally. Externally, on the morning of May 20th, the President of China held talks with Russian President Putin. The two leaders agreed to extend the China-Russia Treaty of Good-Neighborliness and Friendly Cooperation. Domestically, this week, the National Development and Reform Commission issued the "Action Plan for Rule of Law Protecting Private Economy", and held a symposium for private enterprises to listen to opinions and suggestions on the current economic situation and macro policy implementation, attended by representatives of 5 enterprises including KNOWLEDGE ATLAS. Against this background, the A-shares showed narrow fluctuations overall, with extreme differentiation at the industry level: the electronics sector stood out with a weekly increase of 6.56%, while traditional industries such as agriculture, forestry, animal husbandry, fishery, steel, and light industry all experienced a comprehensive correction, showing a clear structural feature of "strong technology, weak cyclicals". 2. How to grasp the current "fish tail market" at this time? The current market may be entering a market phase from the 2025 military parade on September 3rd to mid-October. Referring to the characteristics of this phase, the Shanghai Composite Index is still expected to reach a previous high or set a new high by mid-June, but the rotation is accelerating, and the profit effect is significantly weakening, belonging to a typical "fish tail market". On the macro side, the conflict between the US and Iran is still ongoing, and geopolitical risks are structurally reconfigured. The actual control of the Strait of Hormuz by Iran may become a "fait accompli". With the further rise in pressure of President Trump's opinion polls, and the further depletion of political resources, his best strategy is to compromise as soon as possible to avoid worsening the election situation. Once the compromise is reached, Iran's dominance in the Middle East order will lead to a normalization of high oil prices, further undermining the credit foundation of the US dollar. Under this logic, the medium-term value of assets such as gold and non-ferrous metals is being reevaluated, and Hong Kong stocks are expected to receive new upside momentum due to expectations of US dollar weakening. On the domestic policy side, the Political Bureau meeting at the end of April confirmed that the "main indicators exceed expectations comprehensively", which has a clear policy signal significance. Referring to the experience after similar statements in history, when senior officials believe that economic indicators are better than expected, there is often a period of policy withdrawal for one quarter: short-term funding rates (such as D2007) have shown signs of increase, and financial regulation has further tightened. After the removal of temporary external constraints such as the meeting between the Chinese and US leaders, the People's Bank of China's operating space for "moderate easing" will shrink, and liquidity will gradually return to neutrality. June is a critical window for the intensive landing of IPOs, and the attention and risk appetite for relevant sectors are expected to remain high before and after the IPO. In terms of timing, mid-June is a key point: on the one hand, the two major storage chip giants in China are approaching the critical period of listing. On May 17th, Changxin Technology updated its IPO prospectus (filing), and the review status returned to "inquiry received". At the same time, Yangtze Memory is steadily advancing its IPO preparation and large-scale production capacity expansion work. On May 19th, the website of the China Securities Regulatory Commission disclosed that Yangtze Memory had officially completed the IPO counseling and filing. In the commercial aerospace sector, on May 20th, SpaceX formally submitted an S-1 registration statement (prospectus) to the U.S. Securities and Exchange Commission (SEC). Reuters reported that SpaceX plans to go public on June 12th, potentially setting the largest IPO in history. In terms of this bull market cycle, the announcement of major IPO listings, as well as the clear trend of fund aggregation in the market after successful listings, are evident. The intensive IPOs in hot sectors may bring about a new cycle of market interpretation. The key is not the supply increase from the IPOs themselves, but the concentration of industrial information release, the enhancement of market attention, and the strengthening of fund risk appetite during the IPO process. For example, the IPO of the two major domestic GPU leaders, Moore Thread and Muxi Stock, was accepted on June 30, 2025, followed by a new cycle of market for the science and technology chip sector, lasting for about 3 months. At the end of 2025, the listing of the two giants led to a new cycle of market for the related sectors, lasting about two months. After Changxin Technology's IPO was accepted at the end of last year, the storage chip sector ushered in a new market cycle; at the same time, the commercial space sector's IPO also brought about a new market cycle lasting about 1 month. 3. Investment recommendations The current market may be approaching the market phase from last year's "9.3 military parade" to mid-October. The index is still expected to reach a previous high or set a new high by mid-June, but the rotation is accelerating, and the profit effect is significantly weakening, belonging to a typical "fish tail market". It is recommended to focus on: 1. Storage and Siasun Robot & Automation in the technology sector, which are highly associated with the IPO giants' industrial chain, benefiting from the catalysis of the intense IPO period in June; 2. New energy/battery/power equipment, with the core logic being that investment related to the shortage of electricity due to computing power in the first quarter is mainly concentrated on the corporate end and has not yet reached expectations. However, the global energy security concerns triggered by the Iran situation will accelerate green energy investments in various countries, combined with the prospects of significant improvement in the interim report season; 3. Non-ferrous metals, benefiting from the global asset repricing due to the weakening of the US dollar credit. Risk Warning: Global liquidity tightens beyond expectations, the complexity of market games exceeds expectations, the complexity of the pace of policy changes exceeds expectations, etc.