China Securities: A-shares to see K-shaped rally driven by hard tech in H1 2026
China Securities predicts that the A-share market will experience a pronounced K-shaped structural rally in the first half of 2026, primarily driven by the 'hard technology' sector. Amidst this market trend, public funds have demonstrated strong performance. Specifically, 74.4% of all funds achieved positive returns, with equity funds (stock and hybrid) averaging a 15.93% return. Actively managed equity funds (ordinary stock and equity-biased hybrid) saw even higher average returns of 21.12%. The fund issuance market also continued its recovery, with total issuance reaching 594.856 billion yuan from January to June, marking a five-year high for the same period. Passive index funds led in terms of new launches, with 344 new funds introduced. However, actively managed equity funds attracted a larger total fundraising amount, with 229 new funds raising 185.272 billion yuan.
The forecast by China Securities highlights a potential divergence in market performance, with 'hard technology' acting as a key growth driver. This suggests an increasing focus on innovation and advanced manufacturing within the Chinese equity market. The strong performance of public funds, particularly actively managed equity funds, indicates investor confidence in navigating this specialized sector. The issuance market's robust activity, with a notable preference for actively managed funds despite a higher number of passive launches, points to a demand for expert stock selection. Investors may be seeking alpha generation through specialized strategies rather than broad market tracking. This trend could reflect a maturing market that rewards targeted investment in high-growth, technology-intensive areas, potentially at the expense of broader market indices.
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