Huatai Securities has provided an in-depth analysis, noting that the A-share market last week witnessed a contraction in trading volume and divergent sector performances. Globally, funds within the AI sector shifted their focus from high-flying hardware stocks to more affordably priced application stocks and Chinese assets. A similar trend of rotation from high-priced to low-priced stocks was evident in the A-share market, where defensive sectors demonstrated relatively strong performance. Huatai Securities posits that this adjustment is primarily driven by a reduction in market exuberance and a transition in mid-year report pricing, rather than a fundamental rejection of industry logic.

Looking forward, the discounts on IC and IM index futures have significantly diminished, signaling a release of previously pessimistic expectations. The upcoming week will feature the subscription period for Changxin (historically, the semiconductor sector has experienced pressure from the subscription week until the listing) and a concentrated period of mid-year report pre-announcements. The technology sector is likely to maintain high volatility; however, the listing and earnings validation windows may present opportunities for strategic accumulation.

Operationally, it is advisable to maintain a balanced portfolio allocation. On the technology front, consider purchasing stocks in sectors such as memory, semiconductor equipment, and materials during the cash-in window period, where there remains potential for upward revisions in earnings expectations. Additionally, increase allocations to sectors with relatively conservative valuations relative to their growth prospects, such as coal and commercial vehicles, while continuing to hold high-dividend stocks.