A-share market experiences volatility pullback, battery sector continues decline, Tianqi Materials falls over 3%, Huian Fullgoal Battery ETF afternoon decline narrows, global power shortage resonance and HALO trading rise, how to allocate battery sector?

On March 18, the A-share market experienced volatility and a pullback, with the battery sector continuing its decline. As of 14:18, the Heng Tian Fu (159796) Battery ETF, which is a leading representative in its category with the lowest fee tier, rebounded from its lows, with its decline narrowing to 0.7%, marking a third consecutive day of weakness.

Most of the constituent stocks in the Heng Tian Fu (159796) Battery ETF’s underlying index retreated, with Tianqi Materials down over 3%, EVE Energy down over 2%, and others like GreenMe and Sunshine Power also pulling back. Chahua Intelligent Control bucked the trend with a slight gain.

【Top Ten Constituents of the Heng Tian Fu (159796) Battery ETF’s Underlying Index】

As of 14:26, the constituent stocks are shown for reference only and do not constitute investment advice.

【Industry Chain: Battery Production Rebounds in March, Industry Chain Continues to Improve】

CMB International notes that according to Xinluo Lithium Battery data, battery production across the lithium battery industry chain fully rebounded in March: Mainland Chinese sample battery companies’ planned production reached 149.59 GWh, a month-on-month increase of 21.93%. Among the four main raw materials, cathode materials’ planned output was 19.47 thousand tons (+23.3%), anode materials 16.3 thousand tons (+16.4%), separators 1.895 billion square meters (+8.7%), and electrolyte 107,500 tons (+18.8%). On the demand side, as post-holiday subsidies for car replacement are fully implemented nationwide, new models are densely released in April and May, and the phased “export rush” driven by adjustments in export tax rebate policies for batteries, short-term demand is strongly supported. Meanwhile, geopolitical uncertainties are expected to further boost overseas energy storage demand, and Chinese manufacturers are expanding their global market share by leveraging the cost advantages of lithium iron phosphate (LFP) routes. Based on this, lithium battery demand is expected to remain positive throughout the year. (Source: CMB International, 20260316 “February Power Battery Installations Seasonal Decline, Focus on Industry Chain Production Recovery Pace”)

【Catalysts: Global Power Shortages Resonance and the Rise of HALO Trading】

Tianfeng Securities states that the global HALO trading and North American structural power shortages are driving a systemic reassessment of power solutions. Under the macro resonance of HALO trading and North American structural power shortages, the entire industry chain of “power-grid-battery” solutions is undergoing a systematic revaluation. Currently, North America’s “structural power shortage” caused by AI computing expansion and re-industrialization is becoming the strongest macro-level reflection of “HALO (Heavy Assets, Low Obsolescence) trading.” In the rapidly evolving AI wave, power infrastructure, as the physical foundation, has extremely high reset costs and very low risk of technological disruption. Therefore, North America’s power shortage has transcended individual industry prosperity and has become a core theme in global asset revaluation of “hard infrastructure.” (Source: Tianfeng Securities, 20260314 “Global Power Shortage Resonance and HALO Trading Rise: Reassessing New Power Systems”)

【How to Position in the “Upward Industry Trend + Rich Catalysts” Battery Sector?】

The fundamentals and technological catalysts of the battery sector are expected to support continued strong stock performance. However, given the long industry chain, complex involved segments, and abundant catalysts, individual stock investment is challenging. It may be better to choose index investment to “reduce dimensions” and more quickly seize the historic explosion opportunity in the battery sector!

ETF investment can be approached in two steps: first, select an index that best matches the current explosive growth in energy storage and solid-state batteries; second, choose an ETF with large scale, good liquidity, and low investment costs.

The Heng Tian Fu (159796) Battery ETF’s underlying index has a significantly higher energy storage component and a high solid-state battery content! Looking at the current sub-sectors of the battery industry, energy storage is driven by overseas demand exceeding expectations, with supply-demand dynamics rapidly reversing. The sub-sector’s pricing logic is strong, so focus on the energy storage component in the Heng Tian Fu (159796) index, which reaches 18%, far ahead of similar indices, and will benefit from the energy storage sub-sector’s explosive growth! Additionally, as a new technology, solid-state batteries are continuously hotly debated, with enormous growth potential. The solid-state battery component in the Heng Tian Fu (159796) index reaches 45%, fully benefiting from breakthroughs in solid-state battery technology and the growth opportunities they bring!

Note: Energy storage includes photovoltaic equipment, grid automation, hydropower, and other energy storage devices within the CSI Level 4 industry, with solid-state battery content based on whether the constituent stocks’ popular concept sectors include solid-state batteries, as of 20260227.

Furthermore, the largest industry weight in the Heng Tian Fu (159796) index is battery chemicals, accounting for 32%, which is expected to benefit comprehensively from the upstream material price recovery and the overall industry chain revival.

Note: Based on Shenwan Level 3 industry statistics, as of 20260227.

Compared to the top ten constituent stocks, the Heng Tian Fu (159796) index focuses on the two key sectors of energy storage and power batteries, with the third-largest stock being a leading photovoltaic inverter company accounting for 7.8%. The other similar indices do not include this stock. It also covers global leaders in power batteries and pioneers in solid-state batteries.

Note: Data sourced from the China Securities Index official website and the Guozheng Index official website, as of 20260227.

The Heng Tian Fu (159796) index accurately captures the three core technological directions of battery materials, power batteries, and energy storage batteries, with relatively low proportions of energy metals like lithium and cobalt, reducing the impact of their cyclical fluctuations and the consumer attributes of vehicle manufacturers on the investment rhythm of the battery industry. It also proactively targets the core drivers of technological iteration and demand explosion.

Currently, the Heng Tian Fu (159796) ETF is leading in size and has the lowest fee tier. Among ETFs tracking the CSI Battery Theme Index (CS Battery Index), the Heng Tian Fu (159796) ETF’s size is significantly larger than its peers! Additionally, its management fee is only 0.15% per year, the lowest among similar products, aiming to provide investors with a good investment experience! For off-market investors, consider the linked funds (A-shares: 012862; C-shares: 012863) to quickly seize the “second spring” opportunity in the battery sector!

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