CITIC Securities: Currently, around 60% of institutional holdings are related to AI.

Since October, market volatility has increased, but the success rate of market timing is not high. The reason behind this is that the underlying structure of incremental capital is changing, and the continuous entry of stable absolute return funds into the market is reducing the effectiveness of traditional aggressive timing strategies. Currently, the truly important variables are the stability of the environment for companies going global and AI, which involves the progress of investment in AI infrastructure and Sino-US relations. Not only the TMT sector, but also the rise of the non-ferrous, chemical, and new energy sectors is directly or indirectly influenced by the AI narrative, with these sectors now accounting for over 60% of institutional holdings. In this situation, the strategy for rebalancing is not to deliberately avoid the AI narrative, but to try to select varieties with a bottom-up trend in ROE, as the AI narrative only affects the slope of the market, not the trend.