A research report indicates that the current structural growth market's future focus lies in tracking industry momentum. Key areas to monitor include capital expenditure expectations for leading US stocks, the global semiconductor sales cycle, when inflection points in profit growth for core sectors might occur, and potential slowdowns in industry penetration rates.
Regarding the market's focus on mutual fund concentration in certain stocks, the report observes that active mutual funds are not the primary source of incremental inflows in this cycle. Significant gains in areas like AI-related sectors may be linked to broader market fund inflows. Furthermore, the high allocation of mutual funds to communications and semiconductors is not solely due to concentrated inflows but is also related to these sectors outperforming others.
The report maintains that growth sectors will still hold an advantage in 2026, but their relative performance compared to other sectors may narrow. After three years of capacity reduction cycles, coupled with policies such as "anti-involution," an increasing number of pro-cyclical industries are expected to benefit from supply-demand rebalancing.
The following investment themes are recommended: 1) High-Momentum Growth: AI leaders continue to show high capital expenditure growth, with a focus recommended on infrastructure segments like optical communications and semiconductors. High-growth areas such as energy storage batteries and innovative drugs are also worth attention. 2) Cyclical Improvement: Considering geopolitical situations, potential rises in oil price benchmarks, and industry capacity cycle positions, it is advised to monitor sectors like chemicals, energy metals, oil services engineering, and oil shipping, which are supported by supply-demand dynamics for price increases. Sectors benefiting from international expansion trends, such as power grid equipment, construction machinery, and commercial vehicles, are also highlighted.
A key question addressed is whether high-growth sectors can overcome constraints from global macroeconomic uncertainty. Since the easing of US-Iran tensions in April, global tech growth styles have rallied in sync to new highs. In March, the US-Iran conflict became a key factor affecting global asset pricing, with surging oil prices and supply chain disruptions sparking stagflation concerns. Expectations for Federal Reserve rate cuts were also delayed, leading to a significant decline in global risk assets during March. As both sides gradually signaled negotiations from April onwards and announced a phased ceasefire on April 8th, global risk assets rapidly recovered. Major global indices representing growth styles, such as the Nasdaq, China's ChiNext Index, and South Korea's KOSPI, quickly reached new highs. For instance, the US Philadelphia Semiconductor Index rose 38.6% in April, potentially marking its largest monthly gain since February 2000.
High industry momentum is identified as the key factor enabling growth styles to counter global macroeconomic uncertainty. Despite lingering uncertainties in the US-Iran situation, blocked straits transit keeping oil prices high, and stagflation risks remaining elevated compared to pre-conflict levels, major global and A-share growth indices have led gains and hit new highs amidst seemingly unfavorable macro conditions. The report emphasizes that the decisive factors for growth rallies are strong industry trends and profit realization, which often outweigh other factors like macro conditions, valuations, and liquidity. If the upward momentum trend is clear, growth momentum on the numerator side can potentially offset rising interest rates and risk premiums on the denominator side. The current growth style rally is considered primarily driven by significant breakthrough progress in AI since March. While the Middle East situation initially suppressed this momentum-driven trade, with the reduction in tail risks from the conflict, the previously risk-averse momentum trade is expected to regain dominance.
The report also reviews historical cases where growth sectors strengthened during periods of global macroeconomic uncertainty, providing reference for current market rhythms and allocation strategies. Historical analysis shows that growth styles have repeatedly achieved independent rallies during weak global macro environments.
Looking ahead, the recent strength in growth styles, exemplified by the ChiNext Index, is fundamentally driven by high momentum on the numerator side. The US-Iran conflict since March signifies significantly increased global macroeconomic uncertainty. Higher oil price benchmarks have raised global inflation risks and the threshold for Fed rate cuts, which is not typically a favorable environment for growth styles. However, new highs for the Nasdaq and ChiNext are attributed to high AI momentum offsetting negative impacts on the denominator side. As geopolitical conflict-related trading subsides, this high-momentum trade is returning to the market forefront.
The future focus for growth styles remains on tracking momentum. Key aspects include monitoring capital expenditure expectations for US leaders, the global semiconductor sales cycle, inflection points in profit growth for core sectors, and potential slowdowns in industry penetration rates. Regarding mutual fund concentration, analysis suggests that active mutual funds are not the main source of concentrated incremental fund inflows this cycle. Significant gains in areas like AI may relate to broader market inflows. High fund allocations to communications and semiconductors are partly due to these sectors' outperformance relative to others.
The investment strategy continues to prioritize high-momentum growth and cyclical improvement themes. While growth is expected to maintain an advantage in 2026, its relative outperformance may narrow. Following a three-year capacity reduction cycle and policies like "anti-involution," more pro-cyclical industries are poised to benefit from supply-demand rebalancing. The recommended focus remains on the two main themes outlined.
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