Investment Rating - The industry investment rating indicates a positive outlook, with expectations for the industry index to outperform the CSI 300 index by more than 10% [28] Core Insights - In March, the main sectors are expected to see a slowdown in capital inflow, while the micro-market is likely to maintain its strength [10][12] - Geopolitical risks, particularly from the Israel-Iran situation, have influenced A-share movements, with a notable decline in the ETF risk preference index, indicating a downward trend in market risk appetite [11] - The rise in oil prices has not been accompanied by a corresponding drop in equity assets, suggesting that underlying risks may still persist [11] - The report recommends focusing on sectors benefiting from price increases, particularly agriculture, forestry, animal husbandry, and transportation [11] Summary by Sections 1. Weekly Insights - The main sectors are experiencing a decrease in capital inflow, with a potential shift towards smaller market capitalizations [10] - The micro-market is expected to continue its strong performance due to structural capital inflows from newly issued and existing quantitative products [12] 2. Timing - The A-share index has shown a slight decline of 0.93% over the past week, indicating a marginal upward trend in daily movements [14] - The activity level of informed traders has decreased, reflecting a cautious outlook for the market [15] 3. Industry Monitoring - Significant net inflows were observed in the oil, transportation, and non-ferrous metal sectors, with net inflows of 31.2 billion, 25.3 billion, and 23.4 billion respectively [19] - Conversely, the electronics, computer, and power equipment sectors experienced notable net outflows of 84.7 billion, 45.5 billion, and 38.0 billion respectively [19] 4. Style Monitoring - The report highlights a shift in market preferences, with value stocks outperforming growth stocks this week [25] - High-quality earnings assets have shown continued excess returns, while high turnover stocks have underperformed the market average [25]

Group 1 - The overall equity market experienced adjustments during the week from March 2 to March 6, with the Shanghai Composite Index falling by 0.93% to close at 4124.19 points, and the Shenzhen Component Index declining by 2.22% to 14172.63 points [9][11] - The convertible bond market also saw a decline, with the China Convertible Bond Index dropping by 2.07% and the Shanghai Convertible Bond Index decreasing by 2.21% during the week [16] - The bond market showed a general strengthening trend, with the 1-year China government bond yield decreasing by 3.58 basis points, and the 10-year yield down by 0.67 basis points [20] Group 2 - In the commodity market, performance was mixed, with WTI crude oil rising significantly by 35.63%, while COMEX gold and silver fell by 2.17% and 10.27% respectively [10][28] - The South China Commodity Index overall strengthened, with a 6.43% increase, driven by strong performance in energy and chemical sectors, which rose by 15.45% [28] - The market saw active trading in both convertible bonds and underlying stocks, with transaction volumes of 3674.49 billion and 7711.56 billion respectively, indicating a recovery in trading activity [16]

Quantitative Models and Construction Methods 1. **Model Name**: Five-Dimensional Industry Allocation Model - **Model Construction Idea**: The model is designed to identify industry allocation opportunities by analyzing five dimensions of market data. - **Model Construction Process**: The specific construction process of the model is not detailed in the report, but it is used to recommend industries based on the latest results. For example, the model suggests focusing on the diffusion of price increase logic to low-level sectors, such as agriculture, forestry, animal husbandry, fishery, and transportation industries[1][11]. - **Model Evaluation**: The model is effective in identifying structural opportunities in the market under specific conditions, such as geopolitical risks and market volatility[11]. 2. **Model Name**: Industry Rotation Strategy Based on Consensus Forecast Net Profit FTTM QoQ - **Model Construction Idea**: This model uses the quarter-on-quarter (QoQ) change in forward twelve-month (FTTM) consensus forecast net profit as an industry screening indicator to construct an industry rotation strategy. - **Model Construction Process**: - The model selects industries based on the QoQ change in FTTM consensus forecast net profit. - Historical backtesting was conducted over the period from 2019 to 2025. - **Model Evaluation**: The model demonstrates strong effectiveness during earnings seasons, with the highest median excess return in April compared to other months[13]. --- Model Backtesting Results 1. **Five-Dimensional Industry Allocation Model**: No specific backtesting results or numerical values are provided in the report. 2. **Industry Rotation Strategy Based on Consensus Forecast Net Profit FTTM QoQ**: - Backtesting period: 2019-2025 - Median excess return in April: 2.4%, the highest among all months[13] --- Quantitative Factors and Construction Methods 1. **Factor Name**: BARRA Style Factors - **Factor Construction Idea**: The BARRA style factors are used to analyze market preferences and style shifts during periods of market adjustment. - **Factor Construction Process**: - The factors include turnover, financial leverage, earnings volatility, earnings quality, profitability, investment quality, long-term reversal, EP value, BP value, growth, momentum, non-linear market capitalization, market capitalization, volatility, dispersion, and dividend yield. - The performance of these factors is monitored weekly to assess their impact on market trends[21][22]. - **Factor Evaluation**: The factors provide insights into market style preferences, such as the preference for value over growth and the performance of high-quality earnings assets during the week[25]. --- Factor Backtesting Results 1. **BARRA Style Factors**: - Turnover: -0.3% - Financial Leverage: -0.1% - Earnings Volatility: 0.0% - Earnings Quality: 0.3% - Profitability: -0.2% - Investment Quality: 0.2% - Long-Term Reversal: -0.4% - EP Value: 0.2% - BP Value: 0.2% - Growth: 0.0% - Momentum: 0.7% - Non-Linear Market Capitalization: -0.5% - Market Capitalization: -0.2% - Volatility: -0.2% - Dispersion: -1.4% - Dividend Yield: 0.0%[22][25]

Group 1 - The core viewpoint of the report highlights that the Middle East situation is affecting risk appetite, while the National People's Congress emphasizes expanding domestic demand [1][6] - The North Exchange 50 index fell by 7.14%, with a daily average trading volume increasing by 32% [6][10] - The report indicates that the oil and gas sector performed strongly, with companies like Teris and Keli Co. showing significant gains [6][30] Group 2 - The report notes that the market is primarily focused on the ongoing National People's Congress and the Middle East situation, with upcoming annual and quarterly reports expected to maintain low risk appetite [6][10] - The report suggests investment opportunities in energy, chemical, military, and undervalued high-performing stocks, as well as technology sectors with upward elasticity such as aerospace, computing power, and semiconductors [7][30] - The report identifies specific stocks to watch on the North Exchange, including Tongli Co., Suzhou Axis, and others [7][30] Group 3 - The North Exchange saw two new stocks listed this week: Haifiman and Tongling Technology, with significant first-day price increases [21][22] - The report mentions that the North Exchange's PE (TTM) average is 91.21 times, with a median of 45.77 times [12][18] - The report provides details on the trading volume and turnover rates of specific stocks, highlighting high turnover rates for companies like Changjiang Energy Technology [36][30] Group 4 - The report outlines the new three-board situation, noting six new listings and eleven delistings, with a total of 5,933 companies currently listed [42][46] - It mentions the fundraising activities on the new three-board, with a planned fundraising of 0.30 billion and completed fundraising of 0.38 billion [42][46]

Group 1: Overview of the Two Sessions - The growth target has been adjusted downwards from 5% to a range of 4.5-5%, with a continued focus on consumption and domestic demand [2][9] - Fiscal spending is expected to remain close to last year's levels, with a total deficit of 11.9 trillion yuan for 2026, comprising a deficit of 5.89 trillion yuan, special bonds of 4.4 trillion yuan, and special treasury bonds of 1.6 trillion yuan [2][9] - Special treasury bonds of 2.5 billion yuan will be allocated for new consumption, with an additional 1 billion yuan for fiscal-financial collaborative special funds [2][9] Group 2: Performance Trading Period Post Two Sessions - The correlation between market trading signals and performance changes will strengthen after the Two Sessions, with a focus on price increases and overseas expansion [3][13] - The upcoming month will see a concentrated disclosure of annual and quarterly reports, which will significantly influence market trading styles and directions [3][13] - High-prosperity industries are expected to focus on overseas "offensive HALO" and domestic "defensive HALO" strategies [3][15] Group 3: Impact of Rising Oil Prices on Asset Classes and Industries - During the oil price upcycle, stocks and commodities tend to perform well, with a monthly increase probability of 73% for stocks and 68% for commodities [4][26] - In contrast, during the downcycle, gold becomes a focus, with a monthly increase probability of 62% [4][26] - Key cyclical industries during the oil price upcycle include food and beverage, banking, automotive, home appliances, coal, and chemicals, which show significant cyclical characteristics [4][26] Group 4: Investment Strategy Directions - The report recommends focusing on "offensive HALO" strategies, which include price increases and overseas expansion in sectors such as TDI, amino acids, and high-end manufacturing [5] - Defensive HALO strategies involve sectors with low fund holdings, such as coal and construction, as well as TMT sectors with low correlation [5] - Emerging technology sectors like commercial aerospace, domestic computing power, and quantum communication are highlighted as potential catalysts for investment [5]

Group 1 - The report highlights that the geopolitical situation in the Middle East is affecting risk appetite, with the ongoing tensions leading to a rise in oil prices, which in turn raises concerns about global demand and interest rates [9][10] - The North Exchange 50 index fell by 7.14%, while the average daily trading volume increased by 32% compared to the previous week [9][13] - The report indicates that the energy and chemical sectors, as well as military industries, are expected to perform well, while technology sectors such as commercial aerospace, computing power, and semiconductors are also highlighted for their potential [10][9] Group 2 - This week, two new stocks were listed on the North Exchange: Haifiman and Tongling Technology, with significant first-day gains of 170.42% and 41.42% respectively [24][25] - The report notes that there are currently 297 companies listed on the North Exchange as of March 6, 2026 [24] - The report provides insights into the performance of individual stocks, with notable gainers including Teris and Keli Co., while stocks like Liancheng CNC and Liujin Technology faced declines [34][39] Group 3 - The report mentions that the North Exchange's PE (TTM) average is 91.21 times, with a median of 45.77 times, indicating a decrease in valuation metrics [15][18] - The trading volume for the North Exchange reached 5.339 billion shares, reflecting an increase of 83.03% week-on-week, while the total trading value was 118.436 billion yuan, up 64.89% [21][22] - The report also notes that the margin financing balance decreased by 148 million yuan to 8.39 billion yuan [22]

Group 1 - The core viewpoint is that the market sentiment for high valuation sectors may continue to cool, while the relative advantage of low valuation factors will gradually manifest [1][3][4] - The ongoing situation in the Middle East is shifting from short-term intense conflict to sustained small-scale chaos, which may impact global energy prices and economic concerns [2][15] - The policy design aimed at enhancing corporate quality and efficiency is expected to be the main theme for the next five years, reflecting a shift from traditional production scale expansion to improving profitability [9][22] Group 2 - The emotional sentiment in high valuation sectors has shown signs of decline, with significant fluctuations in investor sentiment indices observed during the spring market [3][16] - There is a potential shift in market styles between large and small caps, as well as between high and low valuation stocks, which may be accelerated by the Middle East conflict [4][17] - The revaluation space for Chinese resources and traditional manufacturing industries remains substantial, especially if return on equity (ROE) returns to reasonable levels [6][19] Group 3 - The current market configuration suggests a focus on sectors with competitive advantages and high barriers to overseas capacity reset, such as chemicals, non-ferrous metals, and renewable energy [11][22] - The report emphasizes the importance of profit margin recovery in various industries, as many sectors are still below historical profit margin levels [8][21] - The recommendation includes increasing exposure to low valuation factors, particularly in industries like insurance and brokerage, which are currently rare [11][22]

- The report introduces a quantitative timing model based on volume signals, referred to as the "Volume Timing Signal" model. The model evaluates market sentiment by analyzing the volume of major indices. As of March 6, 2026, the volume timing signals for all indices, including the Shanghai Composite Index, Shanghai 50, CSI 300, CSI 500, CSI 1000, ChiNext Index, and Beijing 50, indicate a cautious outlook[23][24] - The "HS300 Rising Stock Proportion Sentiment Indicator" is introduced to assess market sentiment by calculating the proportion of stocks in the CSI 300 index with positive returns over a specific period (N days). The formula is: $ \text{HS300 N-day Rising Stock Proportion} = \frac{\text{Number of CSI 300 stocks with positive returns over N days}}{\text{Total number of CSI 300 stocks}} $ This indicator is effective in capturing upward opportunities but has limitations in predicting market downturns. As of March 6, 2026, the indicator showed a slight increase, with the proportion of rising stocks exceeding 60%, indicating high market sentiment[24][25] - The "HS300 Rising Stock Proportion Timing Tracking" applies two different smoothing windows (N1=50 and N2=35) to the above sentiment indicator. When the short-term smoothed line (fast line) exceeds the long-term smoothed line (slow line), it signals a bullish market sentiment. As of March 6, 2026, both the fast and slow lines were rising, with the fast line above the slow line, suggesting a continued bullish outlook[26][28] - The "Moving Average Sentiment Indicator" is based on the eight-moving-average system, which uses the closing prices of the CSI 300 index and calculates moving averages with parameters 8, 13, 21, 34, 55, 89, 144, and 233. The indicator assigns values of -1, 0, or 1 based on the position of the current price relative to the moving averages. When the current price exceeds more than five of the moving averages, it signals a bullish sentiment. As of March 6, 2026, the CSI 300 index was in a non-prosperous sentiment zone[32][36] - The report also analyzes cross-sectional volatility and time-series volatility as indicators of short-term alpha opportunities. Cross-sectional volatility for CSI 300, CSI 500, and CSI 1000 index components increased week-over-week, indicating an improved short-term alpha environment. Over the past quarter, cross-sectional volatility for CSI 300 and CSI 1000 was in the upper-middle percentile of the past six months, while CSI 500 was in the middle percentile. Time-series volatility for the same indices also increased week-over-week, with CSI 1000 in the upper-middle percentile of the past six months, indicating a favorable alpha environment[37][38][41]

1. Report Industry Investment Rating - Not provided in the content 2. Core View of the Report - This week, the global risk - averse sentiment has increased, and global risk assets have declined in resonance. The A - share market has also fallen but shows stronger resilience. The short - term decline does not mean the end of the bull market, and the "Spring Rally" is currently in the third stage [4][13] 3. Summary by Relevant Catalogs 3.1 Market Overview - **Global Market**: Affected by the US - Iran conflict, global stock markets generally declined this week, with South Korean and European stock markets experiencing significant drops. US, Japanese, and German government bond yields rose significantly, while Chinese bond yields slightly declined by 0.7bp. Global commodities saw precious metals fall, and crude oil and natural gas prices rise significantly. The US dollar index rose, and most other currencies depreciated [16] - **A - share Market**: Except for the dividend index, most broad - based indices fell this week, with the Science and Technology Innovation 50 leading the decline at - 4.9%. The trading volume of broad - based indices decreased, with the daily average trading volume of Wande A - share dropping from over 3 trillion on Monday and Tuesday to below 2.5 trillion from Wednesday to Friday. The weekly average trading volume of Wande A - share increased from 2.4 trillion to 2.6 trillion [22][25] 3.2 Industry Performance - **Industry Trends**: This week, the media sector led the decline at - 6.38%, while the top five rising industries were petroleum and petrochemicals (9.06%), coal (7.11%), public utilities (5.77%), agriculture, forestry, animal husbandry and fishery (4.23%), and banks (1.64%) [32] - **Technology Sector**: Since February, sectors such as optical communication, high - frequency PCB, high - speed copper connection, solid - state batteries, and liquid cooling have had excess returns. Since March, only optical modules, optical communication, and controllable nuclear fusion have had certain excess returns. From Wednesday to Friday, sectors such as storage, robots, and commercial aerospace rose with reduced trading volume [33][36] 3.3 Fund Flows - **ETF Funds**: The outflow speed of representative broad - based ETFs has changed little. From January 14th to the end of January, the average daily net outflow of CSI 300 ETF was over 14 billion, and since February, it has slowed to about 1 billion. Since February, the average daily net outflow of SSE 50 ETF has been less than 1 billion, compared with over 5 billion previously. The outflows of SSE Composite, Science and Technology Innovation 50, and CSI 1000 ETFs have slowed down compared with last week, while those of CSI 300, SSE 50, and CSI 500 ETFs have slightly accelerated [40][43] - **Leveraged Funds**: The proportion of margin trading turnover has decreased from 10.08% to 9.23%, and the margin trading balance has decreased from 2.67 trillion to 2.65 trillion. However, there were improvement signals on Thursday. Most industries have de - leveraged, but transportation, petroleum and petrochemicals, coal, food and beverages, textile and apparel, and non - ferrous metals have increased leverage. Stocks of all market - cap gradients have de - leveraged, with large - cap stocks having a larger de - leveraging amplitude. Hot stocks in transportation, petroleum and petrochemicals, non - ferrous metals, and storage have mostly increased leverage [44][52][56] - **Quantitative Funds**: Since March, the excess return of CSI 500 quantitative index enhancement has continued to rise, with a median of 1.5%, while that of CSI 1000 quantitative index enhancement has fallen to - 0.01% [67] - **Main Funds**: From Monday to Wednesday, the main funds in CSI 300, ChiNext, and the Science and Technology Innovation Board had net outflows, with a large outflow on Tuesday. On Thursday, the main funds turned into net inflows, and on Friday, there was a slight net outflow. Overall, the sentiment of the main funds improved after Thursday [74][78] - **North - bound Funds**: This week, the total trading volume of north - bound funds has increased, with the average daily trading volume rising from 323.8 billion to 344.3 billion, and the proportion of A - share trading volume dropping from 13.3% to 13.0%, but still remaining at a relatively high level above 13%. The median of the weekly performance of the top 50 heavy - holding stocks of north - bound funds has risen from - 0.35% to 0.79%, indicating a possible net inflow of north - bound funds [12][82][86] - **South - bound Funds**: This week, the average daily trading volume of south - bound funds has increased from 224.4 billion to 230.6 billion, and the proportion has risen from 47.8% to 52.8%. The average daily net purchase amount has decreased from 460 million to - 140 million. The inflow of south - bound funds into the electronics, communication, computer, medicine, and commerce and retail industries has decreased, while the inflow into the banking, media, and non - bank sectors has increased [90][92][93]

Investment Rating - Industry investment rating is "Outperform the Market" (expected to outperform the market by more than 5% within the next 6 months) [32] Core Insights - The report emphasizes the importance of technological self-reliance and the development of new productive forces, highlighting significant advancements in AI, integrated circuits, and other high-tech sectors [3][6] - The government work report indicates a steady growth in new productive forces, with high-tech manufacturing and equipment manufacturing value-added increasing by 9.4% and 9.2% respectively, and production of industrial robots and integrated circuits growing by 28% and 10.9% [3][6] - The report identifies six emerging pillar industries and six future industries, focusing on integrated circuits, aerospace, biomedicine, low-altitude economy, new energy storage, and intelligent robotics as key growth areas [3][6] Summary by Sections Industry News and Commentary - The government work report highlights the need for original innovation and key core technology breakthroughs, as well as the importance of enhancing systematic innovation capabilities and strengthening the role of enterprises in technological innovation [3][7] - The report from TrendForce indicates a significant increase in demand for AI server storage, with the top five NAND Flash manufacturers experiencing a 23.8% quarter-on-quarter revenue growth, reaching $21.17 billion in Q4 2025 [4][11] Investment Recommendations - The report recommends focusing on high-growth sectors such as AI, integrated circuits, and aerospace, with specific company recommendations including Haiguang Information and Longxin Zhongke for computing chips, and Jiangbolong and Zhaoyi Innovation for storage chips [6][28] - It suggests that domestic wafer fabs have substantial expansion potential, recommending companies like SMIC and Hua Hong Semiconductor, as well as equipment and materials suppliers such as Northern Huachuang and Zhongwei Technology [6][28]