The ChiNext Index is accelerating its transformation into China's version of the Nasdaq, with a concentration of top holdings rivaling the MAG7 and leading performance in both valuation and earnings. As the high growth in computing power and energy storage materializes and the clustering effect among leading technology exporters deepens, the index's characteristics have become highly aligned with the Nasdaq. The fundamental logic for its medium-term relative outperformance continues to strengthen.
This week, the ChiNext Index surged 6.65% to close at 3678 points, significantly outperforming all other major A-share indices and approaching its June 2015 historical high of 3982 points. A recent research report from SDIC Securities strategy team led by Lin Rongxiong points out that the combined weight of the index's top seven constituents—CATL, Zhongji Innolight, New Essex, East Money Information, Sungrow, Shenghong Technology, and TFC Optical—has dramatically increased from approximately 10% in 2019 to about 47%-48% currently. This trend closely mirrors the evolution of the MAG7's weight within the Nasdaq.
This sharp rise in concentration is viewed by many institutions as a structural signal that the ChiNext Index has entered a healthy operational mode. Concurrent research from Shenwan Hongyuan Strategy team, led by Fu Jingtao, characterizes the current ChiNext rally as "typical growth trend investing." They attribute the independent market performance to better-than-expected earnings validation in computing power and energy storage, coupled with the spillover effect of renewed U.S. tech sector dominance into A-shares. The team judges that this outperformance pattern "may still have some sustainability."
From valuation and profitability perspectives, the ChiNext Index's current P/E ratio is around 43x, below the 40th percentile of its historical range and offering about 15% potential upside to its historical median. Combined with forecasted earnings growth of 20%-30% for 2026-2027, its forward PEG ratio stands at just 0.88, below 1. This is relatively low among all major indices, indicating that earnings are healthily absorbing valuation pressures.
**Weight Concentration: The "MAG7-ization" Process from 10% to Nearly 48%**
The SDIC Securities strategy team systematically compared the historical evolution of weight concentration in the ChiNext Index with the MAG7. Data shows that the MAG7's weight in the Nasdaq climbed steadily from about 20% pre-2012, peaked near 50% in 2024, and has since moderated slightly to around 45%. Mirroring this, the combined weight of the ChiNext Index's top seven constituents surged from about 10% in 2019 to the current 47%-48%, showing high convergence in both trend direction and final proportion.
The SDIC team argues the logic behind this structural evolution is that "all trends lead to clustering." Leading technology and export-oriented growth companies, represented by names like CATL, Zhongji Innolight, and New Essex, have become the core targets for concentrated market pricing due to their persistently high growth, accelerating the index's alignment with a "Chinese Nasdaq" profile.
**Valuation & Earnings: PEG Below 1, Growth Leads All Major Indices**
A横向 comparison with the Nasdaq further supports this positioning. SDIC Securities data indicates that based on current P/E ratios, the ChiNext Index trades at approximately 42-43x, similar to the Nasdaq's 43-44x. However, in terms of earnings growth, the ChiNext Index's forecasted 20%-30% growth for 2026-2027 significantly outpaces the Nasdaq's projected 10%-20% for the same period. Overall, the ChiNext's forward PEG of about 0.88 is lower than both the Nasdaq's and the average for all A-share major indices, giving it a relative advantage in current cross-index comparisons.
Notably, the ChiNext Index's P/E exceeded 50x in Q3 last year, reaching above the 75th historical percentile. It has now retreated to around 43x, sitting below both the 40th percentile and its historical median. The SDIC team concludes that the index has entered a良性 mode where "profit growth continuously digests valuation," leading to a temporary alleviation of valuation pressure.
**Independent Rally: Dual-Driven by Growth Validation and U.S. Market Correlation**
The Shenwan Hongyuan strategy team offers further explanation for the ChiNext's standout performance from a market structure perspective. Their report notes that during consolidation phases between "two-stage rally periods," historical patterns show weak sector correlation, making independent rallies by select sectors commonplace. The current ChiNext rally is driven by two factors:
First, better-than-expected earnings validation in computing power and energy storage provides support for "typical growth trend investing." Second, the renewed dominance of U.S. tech stocks, with the Nasdaq hitting new highs in this cycle, creates a spillover effect in A-shares, propelling the ChiNext to new阶段性 highs simultaneously.
The Shenwan Hongyuan team further outlines the general path for thematic rallies: industry growth validation → stock price increase and valuation expansion → reduced short-term appeal and emergence of medium-term valuation constraints → rally stagnation, awaiting new catalysts. Based on this framework, they judge that for tech leaders with earnings surprises, recent price gains match valuation digestion. "Short-term appeal still has room, while medium-term appeal remains unchanged," suggesting the ChiNext's outperformance may persist.
**Outlook: "New Ning Portfolio" Anchored on Tech and Global Expansion**
The SDIC Securities team frames the current ChiNext rally within a longer-term structural narrative. They define the "AI supply-demand gap (inflation) + global expansion of new energy (including power equipment)" as the "New Ning Portfolio," analogous to the dominant role played by the broad new energy-focused "Ning Portfolio" in 2021. They see the historical shift "from the Maotai Index to the Ning Portfolio" as analogous to the ongoing structural portfolio adjustment happening now.
The core medium-term bullish thesis for the ChiNext Index, according to the team, lies in the proportion of "Technology + Global Expansion" contributions to overall A-share profits potentially rising sustainably from the current ~30% range. Historical experience suggests that breaching the 50% threshold could trigger a new upward cycle for A-shares. In this context, "even if there is volatility at higher levels later, it would be difficult to动摇 the sustained optimism for the ChiNext Index based on the New Ning Portfolio."
The Shenwan Hongyuan team maintains its previous structural recommendations, focusing on technology sectors demonstrating "reality checks" that were strong even before the rally, such as optical communication, gas turbines, and energy storage. They also highlight that growth validation is likely to spread across new energy, new energy vehicles, and the export chain, emphasizing that "buying growth may yield significantly better results than buying hedges."
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