Top Institutions Discuss the Market: How Can Global HALO Trading Balance Defense and Offense During the "Two Sessions" Window?

This week, the Shanghai Composite Index rose by 1.98%, the Shenzhen Component Index increased by 2.80%, and the ChiNext Index gained 1.05%. How will the A-shares perform next week? We have summarized the latest investment strategies from major institutions for investors’ reference.

Zhongtai Strategy: Global HALO Trading — How to Balance Defense and Offense During the “Two Sessions” Window?

This week, global markets showed significant divergence, with the Nasdaq under pressure throughout the week. In contrast, the A-share market rebounded clearly after the holiday, with technology sectors showing differentiation. From style performance, mid-cap and small-cap sectors that are more sensitive to policy expectations performed relatively better. The CSI 1000 and CSI 500 indices both gained over 4% during the week. The computing power industry chain, electricity, commercial aerospace, and cyclical resource sectors were active in turn, supported by a strengthening RMB exchange rate. However, under the dominant narrative of “AI swallowing applications,” sectors like software and Hang Seng Tech faced notable impacts. The global HALO trading strategy has become the main direction led by foreign capital, resonating with the A-share market. Looking ahead, the influence of “Two Sessions” policies, geopolitical tensions in the Middle East, and the differentiation in AI hardware and application performance are the most important market signals to watch next week.

Shenwan Hongyuan Strategy: A Talk on “HALO Trading”

The market is beginning to focus on the potential changes in industry organization in the AI era. Industries that could be replaced by AI, industries with weakened barriers and compressed excess profits in the AI era, and tech giants that may no longer succeed in the AI age are all being re-evaluated. Long-term expectations are being re-anchored, and valuation centers face downward pressure. Chinese assets are less affected overall compared to U.S. stocks, with fewer industries enjoying monopoly barriers and excess profits. Currently, it is difficult to comprehensively consider all key factors in the AI endgame. The market tends to project technological industry trends to the ultimate (AI’s final capabilities) but often overlooks the inevitable gradual changes in other critical factors such as productivity, production relations, and political systems during AI’s development. Therefore, the market’s concentrated pricing of the potential impact of AI’s ultimate outcome may lead to mispricing and some over- or under-reactions.

Galaxy Strategy: Two Sessions Preview — Policy Continuity and New Changes

Around the “Two Sessions,” the A-share market may primarily be driven by policy catalysts, with capital competing around industry themes and opportunities aligned with policy guidance, characterized by “hotspot rotation and rapid style shifts.” In the medium to long term, the 2026 government work report and subsequent “14th Five-Year Plan” outline will sketch a clear investment blueprint for the A-share market, likely supporting its long-term stable operation. Key allocation opportunities include: First, the “anti-involution” concept driven by improved supply-demand patterns and industry profit recovery, as well as dividend assets with valuation safety margins. Recent geopolitical uncertainties, such as escalating US-Iran tensions, have positively impacted oil prices, making precious metals a safe-haven choice and benefiting related sectors. Focus on non-ferrous metals (precious metals), oil and petrochemicals, basic chemicals, steel, cement, building materials, and financial sectors. Second, the technology growth sector. As the global landscape accelerates into unprecedented change, China’s economic logic shifts toward new productive forces, with key areas like semiconductors, AI, new energy, military industry, and aerospace worth attention. Additionally, policies aimed at expanding domestic demand create opportunities in consumer sectors, especially in undervalued segments with strong earnings support.

Everbright Strategy: Post-Holiday Performance Worth Expecting — Focus on Growth and Cyclical Trends

The economy will enter a phase of data and policy verification, making market performance worth期待ing. After the Spring Festival, trading activity tends to seasonally rebound, laying a foundation for future market performance. Over the next month, the market will undergo intensive data releases and policy assessments. Key economic and financial data for January and February will gradually be disclosed, establishing the baseline for the year’s economic expectations. Overall, opportunities in March for equities remain greater than risks, with promising performance. Structurally, focus on hotspots and two main themes: one, the “anti-involution” concept driven by supply-demand improvements and profit recovery, and dividend assets with valuation safety margins; two, technology growth sectors benefiting from sustained industry enthusiasm and increased risk appetite in spring. Recent catalysts in industries like humanoid robots and AI chains are worth关注ing. Cyclical sectors benefiting from strong commodity prices and policy support, such as resource commodities and offline services, are also recommended.

Zhongyuan Strategy: March Market Likely to Continue Volatile Uptrend with Structural Differentiation

Looking ahead to March, the market is expected to continue its volatile upward trend with structural differentiation, driven mainly by policy implementation from the Two Sessions and earnings verification from annual reports. From a macro perspective, despite seasonal declines in CPI, the PPI decline narrows, and with the traditional peak season for construction in March, industrial operating rates are expected to steadily rise, supporting economic fundamentals. On the policy front, the Two Sessions are the key focus, with high attention on the 2026 GDP growth target, fiscal deficit adjustments, and special bond issuance scale. Externally, the mid-March Federal Reserve meeting remains a potential source of volatility. Overall, it is advisable for investors to adopt a “balanced leaning toward growth” allocation strategy, maintaining dividend assets to hedge volatility while actively investing in new productive fields. Focus on high-elasticity tech sectors like software, electrical equipment, communications, and internet, while also considering defensive sectors such as retail and food & beverages.

Zheshang Strategy: Main Theme Not Clear, Volatility May Continue — Maintain Flexibility and Continue Waiting

Although most indices rose this week and small/mid-cap stocks performed well, major sectors and large-cap stocks did not show clear leadership. The weighted index of funds increased slightly by 1.77%, lagging behind the small-cap growth index. Structurally, the market shows a clear “post-rank炒” feature. For example, in resource industries, the new highs in this cycle are not in the best fundamentals like non-ferrous metals, but in relatively “lagging” sectors like steel, chemicals, and petrochemicals; similarly, within chemicals, recent gains are led by smaller or second-tier stocks with relatively smaller prior gains. Given the lack of clear main themes and the evident “post-rank炒” pattern, we believe the market still needs sideways consolidation and further foundation-building. Major broad indices are likely to show a “triangle-shaped” oscillation until mid-March, with potential trend opportunities emerging thereafter. Additionally, the Hang Seng Tech Index has weakened due to some heavyweights, so close attention should be paid to the 20-month and 500-day moving averages.

Huajin Strategy: Continued Slightly Stronger Volatility in March, Growth Leading

Currently, A-shares may continue to oscillate mildly upward in March, extending the spring rally. (1) Policies from the Two Sessions are expected to be relatively proactive, with limited external risks. First, the policies may favor continued monetary and fiscal easing in 2026; support for modern industrial systems and expanding domestic demand may be further detailed and implemented. Second, external risks in March are likely limited: US-China relations may improve, and negotiations between the US and Iran could reduce conflict risks. (2) Liquidity may further loosen in March: macro liquidity is expected to ease, and capital inflows into the stock market may remain steady. (3) Economic and earnings data may further recover: economic activity may continue its modest improvement, and corporate profit growth could accelerate.

Dongwu Strategy: Market Rhythm and Layout Before and After the Two Sessions — Industry Allocation Insights

As the “14th Five-Year Plan” begins, the Two Sessions will be a key opportunity to observe China’s policy direction for the coming years and will significantly influence capital markets. Historically, the “Two Sessions effect” shows that A-shares tend to rise before the meetings, consolidate during, and then see increased winning rates and returns afterward. Since 2010, the Shanghai Composite Index has mostly risen in the 20 trading days before the meetings, with an 81% success rate and an average gain of 2.40%. This is because markets tend to be lively in spring before the meetings, with ample liquidity and high risk appetite, leading to rising prices and volumes. During the meetings, uncertainty causes some profit-taking, putting pressure on the market and reducing success rates to around 50%. After the meetings, success rates and returns tend to rise again, with the highest success in the five trading days post-meeting (75%) and an average gain of 2.44% over 20 days.

Guojin Strategy: China as HALO, Physical Assets as Ark

Compared to U.S. stocks, Chinese A-shares are more concentrated in industries like mining and manufacturing that are less susceptible to AI disruption. From an industry-neutral perspective, most Chinese listed companies have a higher proportion of tangible assets relative to their total assets than their U.S. counterparts. China’s manufacturing value-added and material-related industry value-added are also higher than in other major developed economies. Global investors may find that the resilient HALO assets they seek are widely distributed in China, with the capacity value of Chinese assets being irreplaceable. The “productivity equals wealth” thesis we emphasized last year is gradually becoming reality. The revaluation of Chinese manufacturing assets has begun, with capital returning and domestic demand recovering.

Xinda Strategy: Inflation Narrative May Continue to Strengthen

Post-holiday, the Shanghai Index oscillated upward, but the style clearly shows “weak tech narrative, strong inflation narrative,” similar to the overseas “HALO trading.” We believe the overall market trend remains optimistic, but a short-term test phase is possible. The positive policy expectations from the Two Sessions in March may lead to some volatility in the first two weeks. US tariff policies remain uncertain, but RMB appreciation likely won’t be a short-term core contradiction. Future phases may see evolving economic and earnings expectations, with high-frequency macro data still showing divergence. Capital is entering a phase focused on policy effects and economic conditions, with macro expectations possibly rising in March-April. Developments in US-Iran geopolitical tensions may temporarily reinforce inflation narratives based on energy security, creating structural opportunities in gold, oil & gas, and military sectors. Meanwhile, we remain optimistic about overall PPI-based trading opportunities. Based on past A-share experience, bull markets in growth stocks (2009-2010, 2013, 2019-2021) were accompanied by higher ROE, but periods of growth stock bull markets without profit realization (e.g., 2000, first half of 2015) tend to be short-lived.

(Source: Dongfang Caifu Research Center)