A-share Sector Rotation Analysis: Market Style Shifting to Tech Growth

: The chart above clearly shows the divergence in sector capital flows in the current A-share market. The left side displays growth sectors (electronics, pharmaceutical biology, mechanical equipment, etc.) with net inflows of institutional capital, while the right side shows value/defensive sectors (banks, commerce and retail, etc.) with capital outflows. This divergence reflects that the market style is shifting from traditional defense to tech growth.

• Technological Self-Reliance and Self-Improvement
  : The country continues to advance the strategy of technological self-reliance, with policy support for semiconductors, AI, and other fields [1]
• Industrial Upgrade Demand
  : Manufacturing upgrade shifts from traditional manufacturing to high-end manufacturing and digital economy [1]
• New-Quality Productivity
  : Policy orientation clearly supports technological innovation and emerging industries

• Electronics/Semiconductors
  : Benefit from global semiconductor cycle recovery and accelerated domestic substitution
  • GigaDevice, a leading memory chip company, has recently risen by 22.74% [0]
  • AI applications drive growth in memory demand

• Pharmaceutical Biology
  : Improved policy environment for innovative drugs, and long-term demand from aging population
  • Goldman Sachs report指出，生物医药正经历"cardiology renaissance"，该领域有望开启媲美GLP-1药物的重磅产品周期[1]

After adjustments in 2024, valuations of some tech growth sectors have fallen back to a reasonable range, increasing their attractiveness. In contrast, traditional sectors like banks, although undervalued, lack growth potential, leading to capital outflows.

:

1. Capital Sustainability
   : The inflow of capital into electronics and pharmaceutical biology sectors is not a short-term phenomenon
   • Web search results show that in the 2025 A-share sector rotation, electronics and pharmaceutical biology sectors continue to receive attention [2]
   • Capital outflows from defensive sectors like banks indicate an increase in risk appetite

2. Sector Linkage
   : Electronics, computer, communication and other tech sectors are jointly attracting capital
   • Forming a capital resonance effect in tech growth sectors
   • Mechanical equipment sector benefits from high-end manufacturing upgrade

3. Individual Stock Performance Verification
   :
   • Leo Group (+5.173 billion yuan): Digital marketing + AI concept [3]
   • GigaDevice (+3.155 billion yuan): Leading memory chip company, monthly increase of 22.74% [0]
   • Capital inflows into these representative stocks verify the authenticity of the style shift

:

Sector	Investment Logic	Focus Areas
Electronics	AI + Semiconductor cycle recovery	Memory chips, semiconductor equipment, consumer electronics
Pharmaceutical Biology	Innovative drug policy support + aging	Innovative drugs, medical devices, medical services
Computer	Digital economy + AI applications	AI applications, software, cloud computing
Mechanical Equipment	High-end manufacturing upgrade	Industrial mother machines, new energy equipment, robots

:

1. Go with the Trend
   : Allocate to strong sectors like electronics and pharmaceutical biology following institutional capital
2. Select Individual Stocks Carefully
   :
   • Focus on leading stocks with continuous capital inflows (e.g., GigaDevice)
   • Attach importance to the matching degree of performance and valuation
3. Moderate Diversification
   : Diversify allocation within tech growth sectors

:

1. Focus on Policy Catalysts
   :
   • Continuous efforts in technological innovation policies
   • Accelerated implementation of industrial upgrading

2. Grasp Rotation Opportunities
   :
   • When capital is over-concentrated in a certain sector, pay attention to catch-up opportunities in other growth sectors
   • Closely track changes in trading volume and turnover rate

3. Be Alert to Risk Signals
   :
   • When tech stock valuations become bubbly, consider partial profit-taking
   • Pay attention to changes in macro liquidity

:

1. Valuation Risk
   : Some tech stocks have risen sharply in the short term, with correction risks
2. Policy Risk
   : Intensified international tech competition may affect related sectors
3. Liquidity Risk
   : If macro liquidity tightens, high-valuation sectors will be the first to be affected

:

1. Build Positions in Batches
   : Avoid heavy positions in a single sector at one time
2. Dynamic Adjustment
   : Adjust positions in time according to market changes
3. Portfolio Hedging
   : While allocating to growth stocks, retain some defensive assets

• Continuous Policy Support
  : Technological self-reliance and industrial upgrading policies will not easily shift
• Clear Industry Trends
  : AI, semiconductors, innovative drugs and other industries are in a growth period
• Loose Capital Conditions
  : The domestic liquidity environment is generally friendly

1. Sustainability of Capital Flows
   : Whether electronics and pharmaceutical biology sectors can continue to attract capital
2. Policy Catalysts
   : Whether new technological innovation policies are introduced
3. Macro Environment
   : Domestic economic recovery strength and overseas Fed policy

According to Goldman Sachs’ 2026 Investment Outlook Report [1], the global and Chinese markets show the following trends: AI infrastructure investment focus shifts from hardware giants to internal components of data centers (such as memory manufacturers like Micron Technology); biomedicine focus shifts from weight-loss drugs to cardiovascular fields, starting a “cardiology renaissance”; Chinese economy grows beyond expectations, driven by technological progress and export competitiveness. These trends all point to the medium- to long-term investment value of the tech growth style.

1. Structural Opportunities
   : The market shows obvious structural divergence, with capital concentrated in tech growth sectors
2. Style Shift Confirmed
   : The shift from value defense to tech growth is happening
3. Clear Policy Orientation
   : Technological self-reliance and industrial upgrading are core directions

1. Embrace Growth Proactively
   : Shift allocation focus to tech growth sectors like electronics and pharmaceutical biology
2. Select Leading Stocks Carefully
   : Focus on industry leaders with continuous capital inflows
3. Grasp Rotation Rhythm
   : Avoid chasing highs; enter in batches during corrections
4. Control Risks
   : Maintain moderate diversification and avoid over-concentration

The continuous capital inflow into electronics and pharmaceutical biology sectors does mean a market style shift. This is not short-term speculation, but a medium- to long-term trend change based on industry trends and policy orientation. Investors should follow this trend, actively adjust their allocation structure, and seize investment opportunities in tech growth sectors. However, they should also be alert to correction risks caused by excessive short-term gains, and do a good job in position management and risk control. While grasping the main line opportunities, maintain flexibility and a sense of awe.

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[0] Gilin API Data (market data, price data, technical analysis)

[1] Goldman Sachs Group - “Goldman Sachs Team Reveals 2026 Investment Direction, Focuses on Ten Major Themes” - https://hk.finance.yahoo.com/news/高盛團隊揭曉2026投資方向-聚焦ai與電力-新藥研發-陸經濟復甦-fed政策路徑等十大主題-040005552.html

[2] Investing.com - “Leo Group (002131) Latest Stock Price, Real-Time Chart, Price Analysis and Forecast” - https://cn.investing.com/equities/leo-group-a

[3] Eastmoney.com - “Leo Group (002131)_Stock Price_Quotation_Chart” - https://quote.eastmoney.com/sz002131.html