Core Viewpoint - The logic of industry-themed funds is changing, moving away from a passive "beta" strategy focused on popular sectors, and towards a more active search for "alpha" opportunities within industries as public funds increasingly focus on performance-driven investments by 2026 [1][2]. Group 1: Market Dynamics - The simple strategy of investing in popular sectors for easy gains has ended, with a shift towards showcasing fund managers' stock-picking abilities in an "alpha" market [2]. - The 2025 annual ranking of Hong Kong QDII funds showed that industry allocation was key to the top-performing funds, indicating a transition to a more competitive investment landscape [2]. - The influx of southbound capital into Hong Kong stocks in 2025 has started to influence pricing in popular sectors, but the market is expected to balance between southbound and foreign capital in 2026 [3]. Group 2: Investment Strategy - Fund managers are now less willing to invest based on "stories" and are demanding tangible performance metrics, indicating a shift towards profitability-driven investments [4]. - The 2026 investment landscape will likely see reduced opportunities for broad-based gains across sectors, with a greater emphasis on individual company performance [4]. - The focus will be on companies that can demonstrate real financial performance rather than those that rely solely on narrative-driven growth [6]. Group 3: Sector-Specific Insights - The importance of overseas business development (BD) deals is highlighted, as they serve as a credibility endorsement for domestic innovative drug companies, impacting their valuation [7]. - In the AI sector, while hardware remains a strong investment, concerns about the application side's profitability are emerging, suggesting a need for careful evaluation of cash flow sources [7]. - The investment strategy for 2026 will emphasize a balanced approach, combining growth-oriented investments with high-dividend stocks to manage risk and return effectively [8]. Group 4: Future Outlook - The market is expected to transition from extreme growth to a more balanced strategy, with a focus on sectors that are currently undervalued and have potential for recovery [8]. - Fund managers are advised to explore non-consensus opportunities, particularly in consumer sectors that are at historical low levels of market expectations and institutional holdings [8].

Core Viewpoint - The article discusses the performance of A-shares and Hong Kong stocks in the first half of the year, highlighting the emergence of numerous "bull stocks" and the strong performance of funds focused on specific sectors, particularly in innovative pharmaceuticals and new consumption [1]. Group 1: Market Performance - As of June 30, 2023, 136 A-share companies saw their stock prices increase by over 100%, with notable stocks in the Hong Kong market, such as Old Puhuang and Rongchang Biopharmaceutical, experiencing gains close to 200% [1]. - The average return of actively managed equity funds was 7.32%, with a median return of 5.33%, outperforming the three major A-share indices [1]. Group 2: Fund Holdings - The top-performing fund, Huatai PineBridge Hong Kong Advantage Selected Mixed Fund, has significant holdings in Rongchang Biopharmaceutical and other leading Hong Kong pharmaceutical stocks [3]. - As of the first quarter of 2025, 57 fund companies held a total of 6,874,750 shares of Pop Mart, with a 31-fund increase in heavy holdings compared to the previous quarter [3]. - Public funds collectively held 550,150 shares of Old Puhuang, valued at 3.657 billion yuan, with significant contributions from the Guangfa Growth Leading Fund [3]. Group 3: Investment Strategies - Accurate assessment of fundamentals is crucial for identifying potential bull stocks, especially in the innovative pharmaceutical sector, where companies may not show immediate profits during their capability-building phase [4]. - The focus for the second half of the year will be on sectors like AI and innovative pharmaceuticals, with expectations for significant opportunities in AI hardware and software due to technological advancements [4]. Group 4: Industry Outlook - The innovative pharmaceutical sector is experiencing a dual-driven market of valuation recovery and fundamental improvement, with the A-share Shenwan Biomedicine Index's dynamic P/E ratio at a low point historically [5]. - The Chinese innovative pharmaceutical industry is entering a results realization phase, with some companies showing strong potential compared to global peers, warranting close monitoring of their R&D progress and overseas licensing dynamics [5].